The Federal Government is set to begin strict border controls on the physical movement of Dollars and other foreign currencies. This is expected to mitigate foreign exchange scarcity and check money laundering activities, it was learnt.
A draft law to ease Dollar shortage by restricting movement of hard currencies in and out of Nigeria has passed its second reading at the National Assembly. The draft law passed the second reading on Wednesday.
It will ban individuals and companies from exporting more than $50,000 in cash without written approval of the Central Bank of Nigeria, with contraventions punishable by up to two years in prison.
Anyone importing more than $10,000 would have to disclose the source of and use for the funds, according to a copy of the bill seen by Reuters on Wednesday. The Bill, read in the House of Representatives, is designed to replace a law passed in 2004.
A dearth of dollars since crude oil prices slumped in 2014, slashing the Federal Government revenues, prompted a recession in 2016 that the economy exited in the second quarter of this year. Oil sales contribute over 90 per cent of Nigeria’s foreign exchange earnings.
During the currency crunch, most businesses sought dollars on the black market where the Naira, at the start of the year, traded around 30% weaker than on the official market. To resolve the currency crisis, the CBN had set up at least different six exchange rates.
The bill, which would have to be passed by the Upper House to become law, also seeks to extend the time for Issuance of Capital Importation Certificates to 72 hours from 48 hours. Economic and financial experts are divided over the need for the Bill.
A professor of Economics at Olabisi Onabanjo, Sherriffdeen Tella, said the regulation was in order since it had to do with the physical movement of cash. He said, “Normally, international transactions are meant to be done through the banking system. Physical movement of cash is probed in most countries of the world. “For anybody to carry $50,000 in cash looks somehow. Payments are done via debit or credit cards now.”
An economic analyst and Chief Executive Officer of Cowry Asset Management Limited, Mr. Johnson Chukwu, said the Money Laundering Act had taken care of most of things the new law was trying to do.
Chukwu said, “To me, the exigencies of business may not make it easy for you to secure CBN approval before carrying $50,000. We already have a law that stipulates that you have to declare anything in excess of $10,000 and that you cannot move more than N10m or its equivalent. “To declare means you state the source and the use. If it is found suspicious, it will be confiscated.”