Senate Moves to Abolish Informal Forex Markets in Nigeria

A bill to make this a reality has already passed the first reading at the Senate after the Chairman of the Senate Committee on Reparations and Repatriation, Mr Ned Nwoko, moved 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.

The bill, when passed into law by the President, will also make it an offence to use any foreign currency for domestic transactions.

Mr Nwoko said the idea is to create demand for the local currency, the Naira, which is almost at its lowest ebb because of its depreciating value at the currency market.

The Nigerian economy is bleeding because many people do not have confidence in the country’s legal tender and is not being used as a store of value.

At the moment, Nigeria operates more than one foreign exchange (FX) market. The official market is the Nigerian Autonomous Foreign Exchange Market (NAFEM), but currencies are also traded in the black market and the peer-to-peer (P2P) segment via cryptocurrency and all have different exchange rates.

At the plenary on Tuesday, Mr Nwoko said his bill intends to eliminate discriminatory practices and strengthen confidence in the local currency.

When passed and signed into law, nobody living in Nigeria will be allowed to pay salaries of Nigerians or expatriates or transact any business in the country with the Dollar, Pound Sterling or Euro or any other foreign currency.

Also, the government will not be allowed to sell crude oil or other commodities or products in foreign currency but “exclusively in Naira.”

According to him, international buyers would be compelled “to purchase the [local] currency” to drive “its demand and value.”

The lawmaker emphasised that this will “position the Naira as the central currency for all financial operations, reinforcing its dominance in the economy.”