On Tuesday, the Nigerian Senate passed a bill for its first reading that aims to prohibit the use of foreign currencies for payments and transactions within the country.
The legislation is designed to ensure that all payments, including salaries and various transactions, are conducted in the national currency, the naira. Its primary objectives include eliminating discriminatory practices and strengthening confidence in the local currency.
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 for Other Related Matters,” was sponsored by Senator Ned Nwoko, who serves as the Chairman of the Senate Committee on Reparations and Repatriation.
Senator Nwoko expressed concerns that the pervasive use of foreign currencies within Nigeria’s financial system undermines the value of the naira, thereby exacerbating economic challenges. He characterised the reliance on currencies such as the US dollar and the Pound Sterling for domestic transactions as a remnant of colonial practices that impeded Nigeria’s economic independence.
The bill proposes that all payments, including salaries for both local and expatriate workers, be made exclusively in naira. Additionally, it mandates that crude oil and other exports be sold solely in naira, which would require international buyers to purchase the currency, potentially enhancing its demand and value.
Senator Nwoko asserted that this law would establish the naira as the primary currency for all financial operations, thereby reinforcing its importance in the national economy. He believes that the bill would also eliminate informal currency markets that detract from the formal economy and discourage unethical practices like round-tripping by banks.
