Nigeria: Senate Rejects Bill to Review Forex Market Regulations

The Senate has rejected a bill aimed at revising foreign exchange market regulations in Nigeria.

The proposed legislation, sponsored by Senator Sani Musa (APC Niger East), Chairman of the Senate Committee on Finance, sought to establish controls, monitoring, and supervision of transactions within the foreign exchange market.

Titled “The Foreign Exchange (Control And Monitoring) Bill, 2024 (SB. 353),” it was first introduced on February 20, 2024.

In his lead debate, Musa emphasized the bill’s importance, proposing to repeal the Foreign Exchange (Monitoring and Miscellaneous Provision) Act, Cap. F34, Laws of the Federation of Nigeria, 2004. He asserted that the new law would regulate and monitor market transactions, contributing to the development of the national economy by facilitating foreign transactions and maintaining a balance of international payments.

Musa highlighted that the bill aimed to stabilize the currency’s value by liberalizing foreign exchange transactions and revitalizing market functionality. It also sought to empower the Central Bank of Nigeria (CBN) to manage all dealings and transactions related to foreign exchange matters.

Key provisions included:

1. Expanding Section 1 of the existing Act to clarify and empower the CBN.
2. Introducing clauses requiring authorized dealers to report foreign exchange transactions over $10,000 to the CBN.
3. Requiring authorized dealers to obtain CBN approval before importing foreign currency notes.
4. Elaborate provisions for granting, refusing, suspending, or revoking licenses for foreign exchange business dealings.

Musa argued that the bill would facilitate foreign transactions and stabilize the currency’s value by ensuring the liberalization of foreign exchange transactions.

However, many senators expressed concerns that additional legislation could be counterproductive. Senators Solomon Adeola, Tokunbo Abiru, and Aliyu Wadada, among others, voiced serious reservations.

Ibrahim Dankwambo, a former Accountant General of the Federation and now senator representing Gombe North, argued that the law would confuse Nigerians and suggested that any regulatory changes should originate from the executive branch.

Senator Adams Oshiomhole also cautioned against the bill, stating, “We have to be careful because we cannot speculate. Nigerians will take anything done in the house very seriously, because we have the power to make laws. The senators, who have spoken, have summarized and amplified meticulously, the contradictions and negative implications of passing the law.”

Senate President Godswill Akpabio urged Musa to withdraw the bill for further consultations, but Musa refused. Consequently, Akpabio called for a voice vote, and the majority of federal lawmakers voted against the bill, leading to its rejection.