In order to stem the volatility in the exchange rate and bolster the ailing naira, the Federal Government has proposed an amendment to the Foreign-Exchange Act to enable the imprisonment of anyone who holds foreign currencies, especially the dollar, for more than 30 days.

According to ceoafrica, This is the latest measure the government and the Central Bank of Nigeria are considering which stipulates that anybody holding dollars in cash for more than 30 days risk a jail term for as long as two years or a fine of 20 per cent of the amount.

In the new proposals, which were published on the website of the Nigerian Law Reform Commission last week, the CBN is seeking the power to control capital flows and stop people from taking forex out of the country, which will enable regulators to prevent money being repatriated “in accordance with the terms and conditions prescribed by the central bank.

The CBN has increased capital controls since the price of oil, which has led it as Nigeria’s main foreign exchange earner, to crash in the second half of 2014. The amendments are necessary for effective monitoring and control, and to ensure probity in foreign exchange transactions in Nigeria.

The existing law is narrow in scope and prohibits the seizure, forfeiture or expropriation of imported money by the government without providing for exceptions as the apex bank had pegged the naira for 15 months until June this year, a move analysts blamed for causing investors to flee the country, the economy to contract in the first half of the year and the inflation rate to rise to an 11-year high.

According to a Lagos-based research and investment advisory firm, SBM, the latest move will further worry foreign investors because the CBN wants to take its regulatory will to frightening proportions, which will only result to negative investor perception and capital flight.

The Department of State Security (DSS) officials had last week arrested some black market forex dealers for exchanging the naira at a rate weaker than 400 per dollar, compared with the existing street rate of around 460.

However, in his defence of the naira-dollar official exchange rate CBN has been accused of manipulating, the Acting Director, Corporate Communications, CBN, Mr Isaac Okorafor said the apex bank did not introduce the bill in a text message response to Bloomberg, which was not explained.

The Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, while reacting to the development said, “If it did not emanate from the CBN as claimed by its spokesman, it may have emanated from the Presidency or other sources. But the fact is that when you compel people not to hold dollars after stopping the use of naira debit cards abroad, you are discouraging people to bring in money into the country.

“You also push more people to the parallel market and create further gap between the official and black market exchange rates.”