Abuja, Nigeria – The Nigerian House of Representatives has initiated an investigation into the use of the US dollar and other foreign currencies as legal tender for domestic transactions in Nigeria. This move follows a Tuesday order from the House, directing the Committee on Banking Regulation to examine this
practice.
Furthermore, the House of Representatives has urged the Central Bank of Nigeria (CBN) to address the declining value of the Naira concerning the US dollar and other foreign currencies. It has called upon the CBN to adjust monetary policy in order to stabilize the Naira, tackle speculative activities in the foreign exchange market, and increase the Naira’s withdrawal limit to alleviate pressure on the US dollar and other foreign currencies.
The House also called on the Federal Government to implement structural reforms and measures to combat corruption and advance economic diversification in the nation. Additionally, they urged the government to boost foreign investors’ confidence in fiscal and monetary policies, which would stimulate exports and reduce imports.
The National Security and Intelligence Committee and the Committee on Banking Regulations have been instructed to engage with the Central Bank of Nigeria to initiate compliance efforts.
These resolutions were passed following the approval of a motion presented by Hon. Ismaila Dabo.
It is worth noting that in June 2023, President Bola Tinubu had promised reforms to Nigeria’s foreign exchange market. This included using market rates instead of rates set by the CBN for the purchase and sale of foreign currencies. The move was aimed at letting market forces determine the Naira’s value. However, the exchange rate volatility has adversely impacted Nigeria’s economy, leading to increased demand for dollars and a scarcity of the currency.
The House of Representatives highlighted that approximately 90% of Nigeria’s total export revenue comes from oil, which serves as the backbone of the country’s economy. Variations in global oil prices have significant implications for the local foreign exchange market, contributing to the Naira’s devaluation.
The House pointed out that despite the currency unification efforts in June, Nigeria’s foreign exchange inflows have remained sluggish, with high demand for foreign currency and limited access to official markets driving purchases on the black market. Consequently, the Naira has depreciated considerably against the US dollar, falling from N778.602/$ in September 2023 to approximately N1000/$ on the parallel market.
The House’s motion highlighted concerns about inflation, cost of living, reduced investment, and the potential impact on external debt servicing costs. They stressed that addressing Nigeria’s financial challenges requires a collective effort from all stakeholders, including the Parliament, which represents the voice of the common citizens.