The House of Representatives in Nigeria is poised to launch an investigation into the use of dollars and other foreign currencies as legal tender for domestic transactions within the country. This decision follows the unanimous adoption of a motion put forward by Rep. Ismaila Dabo of the APC representing Bauchi State during a plenary session held in Abuja on Tuesday.
Rep. Dabo invoked recent changes announced by President Bola Tinubu in June 2023, in coordination with the Central Bank of Nigeria (CBN). These changes brought about a transformation in the country’s foreign exchange market, with foreign currencies now being bought and sold at rates determined by the market, rather than being set by the central bank.
While the intention behind these changes was to allow market forces to dictate the value of the naira, the resulting exchange rate fluctuations have had a detrimental impact on Nigeria’s economy. The increased demand for dollars and its scarcity have led to significant challenges for the nation’s citizens.
Rep. Dabo expressed his concern over the reduction in investment as the naira continues to lose value against the dollar and other foreign currencies. He highlighted the substantial depreciation of the naira, which plummeted from N778.602 per dollar as of September 26, 2023, to nearly N1000 per dollar in the parallel market. This marked the first time Nigeria had liberalized its foreign exchange market.
Additionally, the lawmaker emphasized the potential consequences of a weaker and depreciating naira, including increased external debt servicing costs, which could lead to reduced government spending in vital sectors such as healthcare and education.
The House of Representatives has urged the Central Bank of Nigeria to address speculative activities in the foreign exchange market and raise the withdrawal limit of the naira to alleviate the pressure on dollars and other foreign currencies. Furthermore, they have called upon the federal government to formulate policies and structural reforms aimed at reducing corruption and promoting economic diversification within the nation’s economy.
The legislators also encouraged the federal government to enhance foreign investors’ confidence in its fiscal and monetary policies to promote exportation and reduce importation. Deputy Speaker Benjamin Kalu has mandated the Committees on Banking Regulations and National Security and Intelligence to collaborate with the central bank and develop compliance strategies. These committees will also investigate the mandatory demands for dollars and other foreign currencies as a means of payment by companies.
This investigation marks a significant step by the House of Representatives to address the ongoing challenges surrounding the use of foreign currencies for domestic transactions in Nigeria.
