The Senate has taken decisive steps toward restoring Nigeria’s monetary sovereignty by proposing legislation that bans the use of foreign currencies for payments and transactions within the country. The initiative seeks to strengthen confidence in the Naira and ensure its central role in all financial operations, including salaries and trade payments.
The proposed bill, 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,” is being championed by Senator Ned Munir Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.
Purpose and Key Provisions of the Bill
Senator Nwoko emphasized that the pervasive use of foreign currencies, such as the U.S. Dollar and the Pound Sterling, within Nigeria’s financial system erodes the value of the Naira and undermines the country’s economic independence. He described the continued reliance on foreign currencies for domestic transactions as a colonial legacy that hampers Nigeria’s growth and monetary sovereignty.
The bill includes the following key measures:
1. Mandatory Use of Naira for Payments: All transactions, including salaries and other forms of remuneration, must be conducted exclusively in Naira. This applies to both Nigerian workers and expatriates working within the country.
2. Naira for Export Payments: Crude oil and other exports must be sold exclusively in Naira. This policy will compel international buyers to purchase Naira for their transactions, thereby increasing demand for the currency and strengthening its value.
3. Eliminating Informal Currency Markets: The bill seeks to dismantle informal currency markets that undermine Nigeria’s formal economy and encourage unethical financial practices, such as round-tripping by banks.
4. Supporting Local Production with Accessible Loans: Banks will be required to offer loans at affordable interest rates to stimulate industrialization and economic growth, particularly in the manufacturing sector. This will help reduce Nigeria’s reliance on imported goods by boosting local production.
5. Safeguarding Foreign Reserves: The bill advocates for storing Nigeria’s foreign reserves domestically, which would protect the country’s economy from external vulnerabilities and reinforce economic sovereignty.
6. Reinforcing Naira Dominance: The legislation positions the Naira as the primary currency for all financial operations within Nigeria, ensuring its dominance in both domestic and international transactions involving Nigerian trade and services.
Expected Benefits of the Bill
Senator Nwoko outlined the anticipated benefits of the legislation, which include:
Restoring Monetary Sovereignty: Prioritizing the Naira for all transactions will reclaim Nigeria’s economic independence and enhance confidence in the local currency.
Strengthening the Naira’s Value: Exclusive use of Naira for exports will increase demand for the currency, thereby improving its value.
Fairness in Salary Payments: Standardizing salaries in Naira will ensure fairness for both local and expatriate workers.
Supporting Industrial Growth: Affordable credit facilities for businesses will encourage local manufacturing, reduce dependency on imports, and create jobs.
Fostering National Pride and Self-Reliance: Reducing reliance on foreign currencies will promote national identity and economic resilience.
Diversifying and Strengthening the Economy: Coordinated monetary and fiscal policies will drive sustainable economic growth and diversification.
Voluntary Transition for Domiciliary Accounts
Senator Nwoko clarified that transitioning existing domiciliary account balances to Naira would be entirely voluntary for account holders. As the Naira gains strength, he believes that the need to hold foreign currencies will naturally diminish, making the transition seamless and attractive to Nigerians.
He further assured citizens that access to foreign exchange for legitimate purposes, such as travel and education, would not be hindered. Reforms within the banking sector would streamline access to Basic Travel Allowance (BTA) and other forex needs, alleviating public concerns about foreign exchange availability.
Learning from Morocco’s SuccessDrawing inspiration from Morocco’s economic model, Senator Nwoko highlighted the stability of the Moroccan Dirham, which has maintained a consistent value against major currencies for over 35 years. He attributed this stability to Morocco’s policy of exclusively using its local currency for all domestic transactions. He argued that Nigeria, with its abundant natural resources and a dynamic population, has the potential to surpass Morocco’s achievements if Nigerians embrace a similar shift in mindset toward the Naira.
Envisioning a Transformative Future
The bill envisions a transformative future where Nigerian banks expand internationally, offering modern financial tools such as cashless wallets to facilitate seamless global transactions. This would address challenges such as the inability of Nigerian debit cards to handle international online payments, while gradually reducing the need for domiciliary accounts.
If passed into law, this bill is expected to mark the beginning of a new era for Nigeria—one characterized by economic growth, cultural pride, and sustainable development anchored in a strong, resilient, and globally competitive Naira.
