Nigerian Senate Proposes Ban on Dollar Salaries and Foreign Currency Transactions.

Nigerian Senate Pushes for Ban on Dollar Salaries and Foreign Currency Transactions

The Nigerian Senate has introduced a bill aimed at eliminating the use of foreign currencies for payments and transactions within the country. This legislation, sponsored by Senator Ned Munir Nwoko, recently passed its first reading and proposes significant changes to financial operations in Nigeria.

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 Other Related Matters,” seeks to establish the Naira as the sole medium of payment for all domestic transactions, including salaries.

Key Objectives of the Bill

1. Promote Naira as the Dominant Currency
   Senator Nwoko emphasized that the bill aims to position the Naira at the core of Nigeria’s financial system. By outlawing foreign currency payments, the Naira’s value is expected to stabilize, enhancing confidence in the local currency.
2. End Discriminatory Payment Practices
   If passed, the bill will make it mandatory for workers, including expatriates, to be paid exclusively in Naira, ensuring fairness in Nigeria’s labor market.
3. Boost Naira Demand through Exports
   A key proposal is that crude oil and other exports will be sold only in Naira. International buyers would have to purchase the Nigerian currency, increasing its demand and value in the global market.
4. Curtail Informal Currency Markets
   The legislation targets informal currency markets that disrupt Nigeria’s economy and encourage unethical practices like round-tripping by financial institutions.
5. Safeguard Foreign Reserves
   The bill also advocates for keeping Nigeria’s foreign reserves within the country to enhance economic sovereignty and protect against external economic vulnerabilities.

Why the Bill Matters

Senator Nwoko argues that the widespread use of foreign currencies, such as the Dollar and Pound Sterling, for domestic transactions is a remnant of colonial influence. He believes this practice undermines Nigeria’s economic independence, perpetuates inflation, and weakens the Naira. By enforcing Naira-based transactions, the proposed law aims to tackle these challenges head-on.

Conclusion

The Nigerian Senate’s proposed bill could mark a turning point for the economy by reinforcing the Naira’s central role. If implemented, this legislation will prohibit salaries, exports, and domestic payments in foreign currencies, encouraging greater reliance on the Naira and fostering long-term economic stability.

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