A new bill seeking to ban the use of foreign currencies such as the US Dollar and British Pound Sterling for domestic transactions in Nigeria has passed its first reading in the Senate.
The proposed legislation, 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,” was introduced by Senator Ned Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.
The bill aims to establish the Naira as the sole legal tender for all financial transactions conducted within Nigeria, including payments, salaries, and other remunerations.
Proposed Economic Benefits
In his presentation, Senator Nwoko criticized the widespread use of foreign currencies in the domestic financial system, calling it a “colonial relic” that undermines the Naira’s value. He argued that such practices erode Nigeria’s monetary independence and perpetuate economic instability.
“The extensive use of foreign currencies in our financial transactions continues to erode the value of the Naira and fosters a dependency that hinders Nigeria’s economic sovereignty. This legislation is a step toward restoring confidence in our local currency and reducing unnecessary pressures on our economy,” Senator Nwoko stated.
The bill also seeks to encourage the adoption of the Naira, strengthen Nigeria’s economy, and ensure that domestic financial transactions rely solely on the country’s own resources.
Key Provisions
If passed, the bill will:
- Ban the use of foreign currencies for salaries, bonuses, and other forms of remuneration within Nigeria.
- Prohibit the use of foreign currencies for local transactions to promote reliance on the Naira.
- Grant the Central Bank of Nigeria (CBN) more authority to enforce these measures and regulate currency use.
Mixed Reactions Expected
While the bill has garnered support for its potential to stabilize the Naira and promote economic independence, it is likely to face criticism regarding its feasibility.
Economic experts and private sector players may raise concerns about Nigeria’s significant reliance on foreign currencies in international trade, diaspora remittances, and business operations. Critics might also question the readiness of the economy to adapt to such a policy and the potential impact on sectors like real estate, import-export businesses, and expatriate salaries.
As the bill progresses through the legislative process, it is expected to spark robust debate on how best to balance economic sovereignty with the realities of global trade and investment.
