The House of Representatives is set to investigate the use of dollars and other foreign currencies as legal tender for domestic transactions in Nigeria.
The call is sequel to the unanimous adoption of a motion by Rep. Ismaila Dabo at plenary on Tuesday in Abuja.
Mr Dabo recalled that in June 2023, President Bola Tinubu, through the Central Bank of Nigeria (CBN), announced changes to the country’s foreign exchange market.
He explained that changes meant foreign currencies would be bought and sold at rates determined by the market, not by the apex bank.
According to him, the change intends to allow market forces to determine the naira value, but the alarming exchange rate has impacted Nigeria’s economy, causing untold hardship due to increased demand for dollars and its shortage.
Mr Dabo said Nigeria’s foreign exchange inflows lag despite the unification in June, resulting in high demand for foreign currency and limited access to official markets, incentivising black market purchases.
“As a result, the naira has lost a greater per cent of its value against the dollar, falling from N778.602 per dollar as of September 26, 2023, to nearly N1000 per dollar at the parallel market, making it the first time Nigeria has liberalised the foreign exchange market,” he said.
A weaker and depreciating naira could increase Nigeria’s external debt servicing costs, potentially reducing government spending on critical sectors like healthcare and education.
The lawmaker expressed worry about the reduction in investment as the naira continues to lose value and depreciate against the dollar and other foreign currencies.
“A weaker and depreciating naira could increase Nigeria’s external debt servicing costs, potentially reducing government spending on critical sectors like healthcare and education.
“The CBN frequently uses its foreign reserves to stabilise the naira, but this can deplete its reserves, making the country vulnerable to economic shocks,” he said.
The House urged the CBN to address speculative activities in the forex market and increase the withdrawal limit of the naira to reduce the pressure on dollars and other foreign currencies.
The legislators also urged the federal government to formulate policies and structural reforms to reduce corruption and promote economic diversification within the nation’s economy.
They urged the federal government to promote exportation and reduce importation by enhancing foreign investors’ confidence in its fiscal and monetary policies.
Deputy Speaker Benjamin Kalu mandated the Committees on Banking Regulations and National Security and Intelligence to interface with the apex bank and initiate compliance strategies.
He also mandated the committee to investigate the mandatory demands for dollars and other foreign currencies as means of payment by companies. (NAN)