The Nigerian Senate has taken a bold step to reclaim the nation’s monetary independence by proposing a bill to prohibit the use of foreign currencies for payments and transactions within the country.
The 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 Other Related Matters,” passed its first reading in the Senate.
It aims to make the Naira the sole legal tender for all domestic transactions, salaries, and payments, including those related to exports.
The bill is sponsored by Senator Ned Munir Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.
Senator Nwoko argued that the dominance of foreign currencies like the Dollar and Pound in Nigeria’s financial system is a legacy of colonial rule, which continues to weaken the Naira and hinder economic growth.
Key Provisions of the Bill
1. Ban on Payments in Foreign Currencies: All domestic payments, salaries (including for expatriates), and financial transactions within Nigeria must be conducted in Naira.
2. Export Transactions in Naira: Crude oil sales and other export deals must be paid for in Naira, forcing international buyers to purchase Naira, thereby boosting its demand and value.
3. Control of Informal Currency Markets: The bill seeks to eliminate illegal currency markets that promote unethical practices like round-tripping by banks.
4. Access to Affordable Loans: Nigerian banks will be required to offer loans at lower interest rates to support industrialization and economic development.
5. Domestic Custody of Foreign Reserves: The bill proposes storing Nigeria’s foreign reserves domestically to protect the economy from external shocks.
6. Strengthening of the Naira: By prioritizing the Naira for both local and international transactions, the bill aims to enhance its value and make it the central currency for Nigeria’s economy.
Expected Benefits
– Boost in Naira Demand: Requiring exports to be paid in Naira will increase demand for the currency, potentially raising its value.
– Fair Payment Systems: The proposal to pay expatriates in Naira aims to eliminate salary disparities and promote equity in the workforce.
– Economic Diversification: By supporting local production and reducing reliance on imports, the bill could stimulate Nigeria’s manufacturing sector.
– National Pride and Self-Reliance: Eliminating the dependence on foreign currencies is seen as a move toward fostering national pride and economic independence.
– Financial Inclusion: The bill proposes innovations in cashless payment systems and international banking, encouraging Nigerian banks to offer better financial services globally.
How the Bill Affects Domiciliary Accounts
Senator Nwoko clarified that converting domiciliary account balances to Naira would be voluntary.
He argued that as the Naira’s value strengthens, Nigerians would naturally shift away from holding foreign currencies.
Access to foreign exchange for travel and other legitimate purposes would be guaranteed through banking reforms.
Drawing Inspiration from Morocco
Senator Nwoko cited Morocco as a case study, noting that the Moroccan Dirham has maintained stability against major global currencies for over 35 years.
He attributed this to Morocco’s policy of conducting all domestic transactions in its local currency.
He suggested that Nigeria, with its abundant natural resources and a large, dynamic population, has even greater potential to achieve similar stability if it adopts a similar approach.
A Vision for Nigeria’s Financial Future
The bill envisions a future where Nigerian banks expand their global footprint, introducing innovative payment systems like cashless wallets to facilitate international trade.
The proposed shift aims to address current issues with Nigerian debit cards, which are often unable to facilitate international online payments, and to make domiciliary accounts less necessary.
If passed into law, this legislation could usher in a new era of economic transformation, with Nigeria reclaiming control over its monetary policy.
By prioritizing the Naira, the bill seeks to promote growth, equity, and national pride, laying a foundation for a more resilient and self-sustaining economy.
