In a bid to address the persistent decline of the Naira, the Nigerian Senate has introduced a bill aimed at banning the use of foreign currencies for payments and other financial 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 for Other Related Matters,” is sponsored by Senator Ned Munir Nwoko, Chairman of the Senate Committee on Reparations and Repatriation.
The legislation seeks to enforce the exclusive use of the Naira for all payments, including salaries, and to end what the Senator described as a “colonial relic” — the widespread use of foreign currencies in domestic transactions.
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Key Provisions of the Bill
The bill proposes that:
- All payments, including salaries and wages, must be conducted exclusively in Naira.
- Exports, including crude oil, must be sold in Naira to drive demand for the local currency.
- Informal currency markets, which contribute to unethical practices like currency round-tripping by banks, should be abolished to stabilize the formal economy.
According to Senator Nwoko, the proposed law is a critical step toward strengthening confidence in the Naira and reclaiming Nigeria’s financial independence.
He said the continued use of foreign currencies in our financial system is a colonial relic that undermines the Naira and hinders our economic sovereignty, and this bill seeks to put an end to discriminatory practices against our currency and reinforce its value.
The Senator also argued that requiring crude oil exports to be sold in Naira would compel international buyers to purchase the currency, potentially driving up its demand and value in global markets.
Beating About the Bush
Despite its intentions, the bill has been met with skepticism from financial experts and economic analysts who argue that it merely scratches the surface of the issues causing the Naira’s free fall. The initiative has been described as a form of “beating about the bush,” pointing out that the fundamental factors driving the currency’s weakness remain unaddressed.
Experts have noted that the problem with the Naira isn’t just how it is used or circulated but also the productivity of the economy. They stressed that until Nigeria boosts domestic production, diversifies exports, and addresses structural inefficiencies, no legislative or monetary intervention will deliver lasting results.
“The strength of Naira does not come from the Central Bank of Nigeria (CBN) but from warehouses and factories (the modern and the old). Until Nigeria leaves financial engineering and focuses on what anchors Naira, Naira will continue to fade. Every apex bank has two core missions: strengthen currency by managing inflation and boost employment through interest rates management,” Prof. Ndubuisi Ekekwe, Lead Faculty of Tekedia Institute, and Chairman of Tekedia Capital, said.
The country’s oil sector, which should be a significant source of foreign exchange, continues to struggle with low production due to theft, underinvestment, and inefficiencies. Industry players have repeatedly called for reforms to address these challenges and ensure that oil output meets its potential.
Economists have long advocated for policies that prioritize economic diversification, increased exports, and improved oil production as sustainable ways to stabilize the Naira. Nigeria’s heavy reliance on oil exports, which account for over 90% of foreign exchange earnings, leaves the economy vulnerable to external shocks when global oil prices fluctuate.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), has emphasized the importance of expanding non-oil exports and strengthening local production. He said there is need for industrialization in driving economic growth, as seen in Europe and North America, and stressed the need for a thriving manufacturing sector supported by innovation, infrastructure, and strong economic policies.
Others have emphasized that Nigeria needs to move beyond its mono-product economy, explaining that increased exports of goods and services, particularly in agriculture, manufacturing, and technology, will create demand for the Naira on global markets and ultimately shore up its value.
While the proposed bill underscores the urgency of addressing Nigeria’s currency crisis, experts warn that without addressing these root causes, legislative fixes may provide only temporary relief, leaving the Naira’s vulnerabilities intact. This means that the success of the legislation will depend on how well it is integrated with broader economic reforms aimed at tackling the structural challenges facing the economy.