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.
However, the relative stability observed in the parallel market segment of the foreign exchange market since the conclusion of Nigeria’s general election appears to have fizzled out as the shortage of dollars has hit the bureau de change segment of the market.
THISDAY’s findings showed that the naira traded between N220/$1 and N222/$ throughout last week. This represented a depreciation by about 12 per cent, compared with the N200/$1 that the currency appreciated to, immediately after the presidential election.
The development has once more widened the gap between the interbank and parallel markets.
The naira has remained stable at the interbank market where it closed at N199.10/$1 last Thursday, while the CBN’s clearing rate remained unchanged at N197/$1.
The President, Association of Bureau De Change of Nigeria (ABCON), Alhaji Aminu Gwadabe, blamed the depreciation of the naira in the parallel market on the significant drop in foreign exchange inflow into the country due to the drop in government’s revenue.
In addition, the ABCON boss also explained that recent foreign exchange policies by the CBN were affecting dollar supply to the market.
Ecobank Nigeria’s financial market analyst, Mr. Kunle Ezun, added that the pressure in the black market was as a result of huge currency demand from importers that do not have the necessary documentation to support legitimate purchases of dollars from the interbank market.
In a related development, Africa’s richest man, Aliko Dangote, in an interview with Bloomberg, has said that with the price of oil hovering at $60 per barrel is sufficient for the Nigerian economy to thrive.
Dangote, who by Bloomberg’s Billionaire Index has an estimated net worth of $15 billion, also announced that he plans to quadruple the supply of gas in Nigeria.
Dangote said he plans to invest about $2.5 billion to boost Nigeria’s gas supply, which currently stands at about 1 billion standard cubic feet per day, to 4 billion.
The completion of an oil refinery plant by the Dangote conglomerate will also see Nigeria having one of the largest petroleum refineries in the world.
A statement from the group revealed that the initial plan was to have 450,000bpd refining capacity, but he has since gone back to the drawing board to enlarge the plant.
He said Nigeria, as a leading producer of crude oil, should also be credited with similar local refining capacity.
According to him, the present situation where the country produces crude oil but goes abroad to buy refined products is unacceptable.
Speaking through his Group Executive Director, Mr. Devakumar Edwin, Dangote said the conglomerate was ready to reverse the trend just as it had successfully done in other sectors, including sugar and cement.
His clarification came just as the company’s Executive Director, Stakeholders Management and Corporate Communications, Mr. Mansur Ahmed, said in South Africa that the refinery would run full swing by 2017.
This Day
