The House of Representatives has announced its intention to thoroughly investigate the utilization of foreign currencies, including the dollar, as legal tender for domestic transactions within Nigeria.
This decision follows the unanimous approval of a motion put forth by Rep. Ismaila Dabo (APC-Bauchi State) during the plenary session held in Abuja on Tuesday.
Rep. Dabo highlighted that in June 2023, President Bola Tinubu, acting through the Central Bank of Nigeria (CBN), implemented changes in the country’s foreign exchange market.
These changes aimed to establish market-determined rates for the buying and selling of foreign currencies, rather than relying on the central bank’s fixed rates.
Despite the intentions behind this change to allow market forces to determine the value of the naira, the alarming exchange rate has adversely affected Nigeria’s economy, resulting in significant challenges due to the increased demand for dollars and the scarcity of foreign currencies.
Rep. Dabo pointed out that despite the unification of the foreign exchange market in June, Nigeria’s foreign currency inflows have not met expectations, leading to a high demand for foreign currencies and limited access to official markets, thereby encouraging black market transactions.
Consequently, the value of the naira has experienced a substantial decline against the dollar, dropping from N778.602 per dollar as of September 26, 2023, to nearly N1000 per dollar in the parallel market. This marks the first time Nigeria has witnessed the liberalization of the foreign exchange market.
The lawmaker expressed deep concern regarding the reduction in investments as the naira continues to weaken and depreciate against the dollar and other foreign currencies. The depreciation of the naira could potentially increase Nigeria’s external debt servicing costs, consequently reducing government expenditure on crucial sectors such as healthcare and education.
Rep. Dabo emphasized that the CBN regularly utilizes its foreign reserves to stabilize the naira. However, this practice depletes the reserves, leaving the country vulnerable to economic shocks.
In light of these circumstances, the House of Representatives has called on the CBN to address speculative activities in the foreign exchange market and to increase the withdrawal limit of the naira. These measures aim to alleviate the pressure on dollars and other foreign currencies.
Furthermore, legislators have urged the federal government to develop policies and undertake structural reforms to combat corruption and promote economic diversification within the nation’s economy.
Additionally, they have called on the government to encourage exportation while reducing importation by instilling foreign investors’ confidence in its fiscal and monetary policies.
Deputy Speaker Benjamin Kalu has instructed the Committees on Banking Regulations and National Security and Intelligence to engage with the apex bank and establish compliance strategies.
Moreover, the committee has been tasked with investigating the mandatory requirement of dollars and other foreign currencies as payment methods by companies.