Reps to investigate use of dollar as legal tender in Nigeria

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Reps to investigate use of dollar as legal tender in Nigeria

The house of representatives has asked the Central Bank of Nigeria (CBN) to address recurring depreciation of the naira against the dollar.

The lower legislative chamber passed the resolution during the plenary session on Tuesday after the adoption of a motion sponsored by Ismaila Haruna Dabo, a lawmaker, from Bauchi state.

The house also resolved to investigate the alleged use of US dollars and other foreign currencies as legal tenders for domestic transactions in the country.

The naira has consistently experienced variations in value ever since the CBN introduced the currency float policy, which now permits market forces to determine exchange rates.

On September 12, the CBN instructed deposit money banks (DMBs) to refrain from using profits derived from the revaluation of the naira for dividend payments or operational financing.

A currency revaluation takes place when the value of a currency is raised in relation to another currency within a fixed exchange rate system.

While moving the motion, Dabo said the “alarming exchange rate” has impacted Nigeria’s economy, causing “untold hardship” due to increased demand for dollars and a dollar shortage.

He said about 90 percent of Nigeria’s total export earnings are from oil, which is the mainstay of the country’s economy.

He added that changes in the price of oil around the world “have a big impact on the country’s foreign exchange market”.

“This explains why the naira has continued to depreciate,” he said.

“Nigeria’s foreign exchange inflows are lagging despite unification in June, with high demand for foreign currency and limited access to official markets incentivizing black market purchases, the naira has lost a greater percent of its value against the dollar.”

The legislator said inflation, cost of living and the depreciating naira make imported goods more expensive, leading to higher inflation rates.

According to Dabo, the increased cost of living “disproportionately” affects the most vulnerable citizens as they struggle to afford basic necessities which are “now glaring across the country”.

He said the continued depreciation of the naira could increase Nigeria’s external debt servicing costs, potentially reducing government spending on critical sectors like healthcare and education.

Contributing to the debate, Ademorin Kuye, a lawmaker from Lagos, alleged that some airlines, schools and real estate have been insisting that Nigerians make payments in dollars.

He said such a demand violates the CBN Act which states that only naira is an acceptable currency as a legal tender in the country.

“These are serious matters that should be looked into,” he said.

The motion was voted for when it was put to a voice vote by Ben Kalu, deputy speaker, who presided over the plenary.

The house asked the CBN to implement monetary policy adjustments to “stabilise the currency and address speculative activities in the forex market”.

The lower chamber also asked the apex bank to “increase the withdrawal limit of the naira to reduce the pressure on dollars and other foreign currencies”.

The lawmakers also asked the federal government to promote exportation and reduce importation by enhancing foreign investors’ confidence in its fiscal and monetary policies.

The house mandated the committees on banking regulations and national security and intelligence to “interface” with the CBN to initiate compliance strategies.