Members of the Senate while deliberating on activities of the National Hajj Commission (NAHCON) have suggested that a concessionary FX rate of N200 a dollar be given to intending pilgrims. The decision was based on the fact that certain businessmen were allegedly getting discretionary FX rates of N200 to a dollar.
Senate Bukola Saraki while commenting during the debate said: According to the Medium Term Expenditure Framework we passed, the exchange rate should be N305 to a dollar. If with the MTEF we passed, certain businessmen are getting N200 to the dollar, then definitely pilgrims deserve N200 a dollar as well.
Why this is a bad idea
Even though the Senate has no power to set or fix exchange rates, the move could set a bad precedence. Pilgrims already get a discounted exchange rate from the federal government. The Central Bank of Nigeria (CBN) in a circular issued July 2016, instructed commercial banks to sell dollars to pilgrims at a concessionary rate of N197. Pilgrims could however purchase a maximum amount of $1000 at the concessionary rate.
Setting the rate much lower, could lead to abuse and even round tripping. The Senators could one day decide to even unilaterally increase the minimum amount that can be bought by pilgrims. In addition to concessionary rates from the CBN, several states also give pilgrims allowances in addition to paying for their airfare.
What can be done instead
Rather than legislate on matters such as foreign exchange rates, the Senate should busy itself with passing critical laws that will make the Nigerian business environment more friendly. That way, businesses would be able to run in a profitable manner and intending pilgrims would not need a discretionary exchange rate or any form of government assistance to go on pilgrimage. Parts of the Petroleum Industry Governance Bill (PIGB) which has been split into several bills have yet to be passed by the National Assembly.