CBN to push for amendment of foreign exchange act

05 May 2015, Abuja – As part of efforts to halt the seeming dollarisation of the Nigerian economy and also combat money laundering, the Central Bank of Nigeria (CBN) has concluded plans to push for an executive bill that will lead to the amendment of the Foreign Exchange Miscellaneous Act, 1995.

The move, THISDAY was reliably informed by a high ranking central bank official, is one of the reforms for the foreign exchange market and is aimed at strengthening measures against the dollarisation of the domestic economy.

Specifically, the central bank aims to push for the amendment of Section 12(1) and 12(2) of the Act, which provide for the declaration of foreign currency at ports of entry or exit in the country.

While Section 12(1) of the Act stipulates that “no person shall be required to declare at the port of entry into Nigeria any foreign currency unless its value is in excess of US$5,000 or its equivalent”, Section 12(2) states that “foreign currency in excess of US $5,000 or its equivalent, whether being imported into or exported out of Nigeria, shall be declared on the prescribed form for reasons of statistics only”.

The central bank official explained that this is one of the key reforms in the foreign exchange market that the central bank would be pushing for through the amendment of the Act.

“As it stands, the Act permits persons to carry out any amount, even $1 million or $10 million in cash, insofar as it is declared in the Customs form. But this is not allowed anywhere in the world as it is a perfect conduit for money laundering.

“People can’t be carrying huge amounts of foreign currencies in and out of the country through our airports. Nigeria is one of the few countries where such is done and we must discourage that.

“We have the inbound and outbound money transfer channels and we are encouraging everyone, including foreigners, to take advantage of that,” he said.

The CBN last month also restated its resolve to prosecute anyone found transacting business in the country with any foreign currency as a medium of payment.

The banking sector regulator had frowned on what it described as the rising use of foreign currencies in the domestic economy as a medium of payment for goods and services by individuals and corporate citizens.
It stated that it had observed that some institutions priced their goods and services in foreign currencies and demand payments in foreign currencies rather than the domestic currency (the naira), which is the legal tender in Nigeria.
The CBN Act states inter-alia that “the currency notes issued by the Bank shall be legal tender in Nigeria… for the payment of any amount”.

Furthermore, the Act stipulates that any person(s) who contravenes this provision is guilty of an offence and shall be liable on conviction to a prescribed fine or six months imprisonment.

The CBN Governor, Mr. Godwin Emefiele, had declared recently that the currency for transacting business in the country remains the naira and warned that it is illegal to carry out transactions using the US dollar.
He said the CBN would in due course go after those who violate the policy.

The central bank official further expressed optimism that Nigeria’s foreign exchange reserves, which had been hovering around $29 billion in the last few weeks, would begin to grow by the beginning of the third quarter of the year. External reserves stood at $29.512 billion as at April 28.

The source explained that the slight appreciation in the price of crude oil in the international market has not translated to forex reserves accretion in recent weeks because Nigeria’s crude oil is sold based on forward contracts and as such the proceeds from the sales for the first three months of the year is what is just being received by the country.

“The money we are getting now is for crude oil sold in January, February and March, but hopefully by July, when the proceeds for crude oil sold April and May comes in, it would begin to impact on our external reserves,” he said.

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