The Senate has frowned at a recommendation by the Nigerian Law Reform Commission for a review of the Nigerian Foreign Exchange (Forex) Act in order to empower the Central Bank of Nigeria to jail people for up to two years  or fine them for 20 percent of the amount of the foreign currency held in their possession for more than 30 days.

In a statement signed by its spokesperson, Senator Aliyu Sabi Abdullahi, the Upper Chamber stated that with its focus on boosting investor’ confidence in the nation’s economy,  such move as proposed by the Commission  will prevent investors from making  free entry and free exit from the market. Consequently, the Senate said it will not review the Act as a way of encouraging foreign investors.

The statement said: “The measure is disruptive and counter-productive, threatening to undermine many of the reform efforts already underway in the legislature and by government ministries intended to boost investor confidence.

“The Senate would never pass such a punitive and regressive proposal. Overall, some of the Commission’s recommendation has many sound attributes and could help Nigeria’s investment climate.

“We believe the CBN should have the authority to regulate the forex market and determine the exchange rate policy as already enshrined in its enabling Act.

”A market-oriented exchange rate policy is the best recipe for guiding the operations of the foreign exchange market.  This will ensure the supremacy of market mechanisms in efficiently allocating the scarce forex resources.

“We will continue to work with the Executive to halt the worsening recession and return to economic growth.

The proposed changes are said to be intended to help control capital flows and prevent foreign exchange from being taken out of the country.

Nigeria has had a bad patch with forex management in recent years with the naira receiving a battering at the forex market. One of the reasons advanced was capital flight whereby some individuals and corporates salt dollar away from the country without control. This in addition to the fall in global crude oil prices has led to a grave crash of the value of the naira against major international currencies.

In June this year, the CBN loosened its control over exchange rate policy in a bid to encourage investors to return to Nigeria and prevent capital flight.

Hopes were high after the Nigerian government finally allowed the naira to float, as was recommended by domestic and international investment advisors but even this did little to save the naira as it has continued to slide in value against the dollar and others.