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Thursday, 5 March 2020

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UPDATE - Reps begin probe of $30billion forex leakages

The House of Representatives has resolved to investigate companies manipulating Central Bank of Nigeria (CBN) foreign exchange regime...

The House reached the resolution following a motion moved by James Faleke. 

The lawmaker in his motion stated that Nigeria is losing over $30billion annually to companies who are manipulating the system.

Leading the debate, Faleke said, “In the process of our revenue monitoring in the past three weeks, we discovered many issues. 

Every company has the liberty to apply for forex for importation of equipment or whatever they need in order to continue with their businesses. 

At the point of applying for forex, some of them use performance invoice. 

For instance, let’s say a merchant has $50,000 performance invoice, at the point of shipment, they collude with the exporters from the other country, to reduce the value of that shipment.

“Meanwhile, they have secured $50,000 at the official exchange rate. When they get to Nigeria, they pay less to customs, based on the reduced value, at the end of day, they go ahead to clear the goods, that they use the equipment for their production. 

However, they inflate the value of the equipment in order to take capital allowance, thereby reducing the 30% tax they are supposed to pay.

“Some companies take forex from CBN and invest in shares of US stock market, they take forex at our official rate and invest on some foreign economies that are not related to Nigeria. It’s like capital flight.

 We need to block and expose them.”
Also speaking on the motion, Toby Okechukwu said that the authority should be held responsible for failing to regulate the activities of those companies.

Reacting to the motion, the Speaker, Femi Gbajabiamila said that there are two types of leakages, one is negligence based leakages and more grievous one is the calculated one.”

The House, therefore, called on the House Committees on Finance and banking and currency to conduct investigation into the alleged sharp practice.

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