The Nigerian Senate has taken a significant step towards reclaiming the nation’s monetary independence by pushing for a ban on the use of foreign currencies for payments and transactions within the country.
The proposed bill seeks to ensure that all forms of payment—including salaries, export proceeds, and other financial transactions—are conducted exclusively in Naira.
The move is aimed at curbing the dominance of foreign currencies in Nigeria’s economy, boosting confidence in the local currency, and promoting economic stability.
Titled “A Bill for an Act to Alter the Central Bank of Nigeria Act, 2007, No. 7, to Prohibit the Use of Foreign Currencies for Remuneration and for Other Related Matters,” the legislation is sponsored by Senator Ned Munir Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.
Senator Nwoko expressed concern that the persistent use of the Dollar, Pound Sterling, and other foreign currencies in Nigeria’s domestic transactions is eroding the value of the Naira and entrenching economic dependence.
He described this trend as a “colonial hangover” that continues to limit the nation’s financial sovereignty.
Key Provisions of the Bill
The proposed legislation outlines several critical measures aimed at strengthening the Naira and fostering economic independence:
1. Mandatory Use of Naira for Salaries and Payments
– All workers, including expatriates, will be paid exclusively in Naira, abolishing the payment of salaries in foreign currencies.
2. Export Payments in Naira
– Payments for crude oil and other exports must be made in Naira. This policy is expected to increase demand for the currency as international buyers will be required to purchase Naira for trade with Nigeria.
3. Ban on Informal Currency Markets
– The bill seeks to eliminate informal currency markets that promote unethical practices such as round-tripping by banks, thereby stabilizing Nigeria’s formal financial system.
4. Access to Loans at Low Interest Rates
– Banks will be mandated to provide loans at affordable rates, encouraging industrialization, supporting small businesses, and stimulating local production.
5. Holding of Foreign Reserves Domestically
– The bill proposes that Nigeria’s foreign reserves be stored within the country, thereby reducing exposure to external economic vulnerabilities and enhancing financial self-reliance.
6. Reinforcing the Naira as the Primary Currency
– The Naira will become the exclusive currency for all domestic transactions, ensuring its dominance in Nigeria’s financial operations.
7. Voluntary Conversion of Domiciliary Accounts
– Holders of domiciliary accounts will have the option to convert their balances into Naira voluntarily. Senator Nwoko assured that as the Naira’s value strengthens, the need for individuals to hold foreign currencies will naturally decline.
8. Streamlined Access to Foreign Exchange
– Access to foreign exchange for essential purposes such as travel and education will be made more accessible through banking reforms. Travelers will still be able to access Basic Travel Allowance (BTA) and other forex needs through regulated channels.
Economic Impact and Global Comparison
Senator Nwoko drew inspiration from Morocco’s financial system, where the Moroccan Dirham has maintained stability against major global currencies for over 35 years.
He credited this success to Morocco’s strict policy of using its local currency for domestic transactions.
Nigeria, with its abundant natural resources and large population, has the potential to achieve similar financial stability, Senator Nwoko argued.
He urged Nigerians to support the paradigm shift in currency usage, noting that such changes would not only stabilize the economy but also foster national pride.
Future Prospects
If passed, the bill could set the stage for Nigerian banks to expand their operations internationally and offer modern financial services such as global cashless wallets.
This would address existing limitations, such as the inability of Nigerian debit cards to process international online transactions.