Ex-CBN director lauds CBN on benchmark interest rate reduction
CBN

By Gabriel Ewepu – Abuja

Following circular recently issued by the Central Bank of Nigeria, CBN, on control of foreign exchange access, 55 registered Commodity Associations under the auspices of the Federation of Agricultural Commodity Associations of Nigeria, FACAN, on thursday, demanded unfettered access to foreign exchange.

This demand was made at a press conference held in Abuja, where the President of FACAN, Dr Victor Iyama, said the action of CBN would hamper export trade in Nigeria and encourage importation.

According to Iyama their demand is in the interest of the economy and particularly farmers, and also to encourage more revenue generation from the agricultural commodity export because it has high potential to turn around the fortune of the country, but government policy should encourage those who are working hard to generate high foreign exchange for the country through their commercial activities to have unfettered access to their money in their various banks and not to restrict them.

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Some of the demands by FACAN include reversal of the circular, because the reversal would lead to increased legal exports, increased revenue to the country, reduce smuggling activities, improve forex earnings, reduce corruption, provide employment opportunities in the sector, increase productivity and improve the living standard including the balance of trade.

It also stated that any exporter who refuses to comply with 100 per cent repatriation of export proceeds into the country, should be treated as an economic saboteur and sanctioned according to as we in the league of exporters are ready to enforce compliance.

Meanwhile, FACAN expressed readiness to dialogue on contents of the circular affecting them with President Muhammadu Buhari when called upon to explain their position.

He said: “The Federation of Agricultural Commodity Associations of Nigeria (FACAN), the apex and umbrella body of all Agricultural Commodity Associations in the country, comprising 55 registered Commodity Associations along the value chain, have over the years contributed greatly to the economic growth of the country through the generation of foreign exchange to the economy from Non-Oil Export Exchange proceeds.

“We wish to draw your attention to the Circular dated 20th February 2015 issued by the CBN and the recent circular dated 24th September 2020  which in no unclear terms, states that its intent is to construe Paragraph (5) (d) of Memorandum 26 of the Foreign Exchange Manual made pursuant to Foreign Exchange ( Miscellaneous Provisions) Act, Cap F34, LFN,2004 by clarifying the term “unfettered access” as used in the manual.

The Circular states in part as follows; “Following different Interpretations of Memorandum 26, Paragraph (5). Section (D) of the Foreign Exchange Manual. It has become imperative to clarify the term “unfettered access” as contained in the provisions under reference.

For the avoidance of doubt, all authorized dealers and the general public are to note that henceforth, the term “unfettered access” granted to holders of export proceed domiciliary account shall strictly be construed to mean that the proceeds of exports in the account can only be: Used by the exporters to finance eligible and other trade-related transactions supported with appropriate documentation; Sell to authorized dealers (banks) for eligible transactions only”.

“The circular now forms the basis upon which our respective Banks, who are holders of our Non-Oil Export Proceeds Domiciliary Accounts, restrain our erstwhile unfettered access to foreign exchange remitted into our Domiciliary Accounts. It is most expedient to inform you of salient factors that render the Circular ill-conceived, unjustifiable, and completely unfounded even within the ambit of extant laws and regulations governing foreign exchange issues in Nigeria namely; the Central Bank of Nigeria Act,Cap C4, LFN, 2004, the Foreign Exchange ( Miscellaneous Provisions) Act, Cap F34, LFN,2004 (Foreign Exchange ( Miscellaneous Provisions) ) and the Foreign Exchange Manual made pursuant to latter. This factor bothers both Legal and Government Economic Policy.

“Legal factor; The Circular under reference was said to be based on Memorandum 26, and in particular, Paragraph (5), Section (d) of said Memorandum, as contained in the Foreign Exchange Manual. Sir, it will interest you to know that the provisions of Memorandum 26 (5) (d) of the Foreign Exchange Manual have no bearing, and by a stretch of logical imagination can they form a platform for the instruction contained in the circular.

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Memorandum 26 (5) (d) of the Foreign Exchange Manual provides as follows: “Holders of Ordinary domiciliary accounts shall continue to have unfettered access to funds in their accounts with minimum documentation. In other words, the instructions of the account holder shall be sufficient to access funds in the account irrespective of the payment mode. Therefore, the requirement of Form “A” for withdrawal is no longer necessary”

“The irresistible conclusions to be drawn from the above are as follows: It is clear from the above that the provision of Memorandum 26, Paragraph (5), Section (d) relates to Ordinary Domiciliary Accounts and not Export Proceed Domiciliary Accounts. More importantly and most interestingly, it remains to be seen how the provision for “unfettered access” in a manual/regulation made pursuant to an Act can be interpreted vide a Circular to impose restrictions on “Access”

“The clear intendment of the Foreign Exchange ( Miscellaneous Provisions) Act, is to create an open Foreign Exchange platform where the parties involved i.e Authorized Dealers, Authorized Buyers, Exporters, and the Public can freely deal or transact in Foreign Exchange. Section 9 of the Foreign Exchange (Miscellaneous Provisions) Act specifically provides; “The rate at which each transaction in the Market shall be the rate mutually agreed between the applicant purchaser and the Authorised Buyer concerned.”

“The Circular is therefore in direct conflict with the provisions of the Foreign Exchange (Miscellaneous Provisions) Act and Foreign Exchange Manual and consequently unlawful.”

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