The Nigerian Senate has taken significant steps towards reinstating its monetary sovereignty by introducing legislation banning foreign currencies for transactions and payments within its borders.
The proposed bill seeks to ensure that all financial dealings, including salaries and general transactions, are carried out exclusively in Naira.
This initiative aims to eliminate discriminatory practices and bolster confidence in Nigeria’s local currency, making it mandatory for exports to be settled in Naira.
Titled “A Bill for an Act to Amend the Central Bank of Nigeria Act, 2007, No 7, to Prohibit the Use of Foreign Currencies for Remuneration and Other Related Matters,” the legislation is championed by Senator Ned Munir Nwoko, who chairs the Senate Committee on Reparations and Repatriation.
Senator Nwoko highlighted that the prevalent use of foreign currencies within Nigeria’s financial landscape undermines the Naira’s value and exacerbates economic difficulties. He described the reliance on currencies like the Dollar and Pound Sterling for local transactions as a remnant of colonialism that impedes Nigeria’s financial autonomy.
Key provisions of the bill include banning salaries and transactions in foreign currencies to ensure all workers, including expatriates, are compensated in Naira.
Mandating that crude oil and other exports be sold solely in Naira would encourage international buyers to acquire the currency, enhancing its demand and value. Establishing the Naira as the central currency for all financial activities solidified its economic prominence. The aim is to eliminate informal currency markets undermining the formal economy and encourage unethical practices like bank round-tripping. Directing banks to offer loans at lower interest rates to stimulate industrial growth and economic advancement.
Others advocate retaining Nigeria’s foreign reserves domestically to protect the nation’s economic integrity and minimise exposure to external risks. They also advocate reclaiming monetary independence by prioritising the Naira in domestic and international dealings.
“Promoting the value of the Naira through increased demand driven by its exclusive use for exports. Ensuring fairness in salary payments by standardising remuneration in Naira for local and foreign workers. Supporting the manufacturing sector with accessible credit options to boost local production, lessen reliance on imports, and foster national pride and economic self-sufficiency by reducing dependence on foreign currencies and building a diversified and resilient economy through coordinated monetary and fiscal policies,” he said.
Senator Nwoko clarified that converting domiciliary account balances to Naira would be voluntary for account holders. As the Naira gains strength, the necessity for holding foreign currencies would decrease, facilitating a smoother transition.
He also reassured Nigerians that banking reforms would improve access to foreign exchange for travel and legitimate needs, addressing concerns about the Basic Travel Allowance (BTA) and other forex requirements.
Drawing a comparison with Morocco, Senator Nwoko noted that the Moroccan Dirham has maintained consistent value against major currencies for over 35 years due to the country’s policy of utilising its local currency for domestic transactions.
With Nigeria’s abundant natural resources and vibrant population, the country is well-positioned to exceed Morocco’s achievements, provided there is a shift in how Nigerians view and use the Naira.
The bill envisions a future where Nigerian banks expand their international presence, offering innovative financial solutions such as cashless wallets to simplify global transactions. These initiatives aim to resolve existing issues, such as the limitations of Nigerian debit cards for international online transactions, while gradually making domiciliary accounts less essential.