ENUGU, Nigeria (VOICE OF NAIJA)- The Nigerian House of Representatives has launched an investigation into the use of foreign currencies, including the US dollar, as legal tender for domestic transactions.
This move comes as the Naira’s value depreciates in relation to foreign currencies.
The House has called on the Central Bank of Nigeria to address the depreciation of the Naira and implement changes to stabilize the currency.
They have also requested alterations to monetary policy to reduce speculation in the foreign exchange market and increase the Naira’s withdrawal cap to alleviate pressure on foreign currencies.
Furthermore, the House has urged the Federal Government to implement structural changes and anti-corruption measures to diversify the nation’s economy. They have also called for increased confidence from foreign investors in fiscal and monetary policies to boost exports and reduce imports.
To ensure compliance with these resolutions, the National Security and Intelligence Committee and the Committee on Banking Regulations will engage with the Nigerian Central Bank.
These decisions were made following the approval of Hon. Ismaila Dabo’s motion. The House referenced President Bola Tinubu’s promise to reform the foreign exchange market in June 2023, aiming to allow market rates to determine currency exchange values.
However, the volatile exchange rate has adversely affected Nigeria’s economy due to increased demand for dollars and limited access to official markets.
The House pointed out that approximately 90 per cent of Nigeria’s total export revenue comes from oil, which significantly influences the foreign exchange market due to global oil price fluctuations, resulting in the Naira’s devaluation, according to Punch.
Despite currency unification in June, foreign exchange inflows have been insufficient, and high demand for foreign currency has driven transactions to the black market, causing the Naira to lose value against the US dollar.
According to the House, this is Nigeria’s first time liberalising the foreign exchange market.
The motion reads, “The House is worried about inflation and the cost of living; depreciating naira makes imported goods more expensive, leading to higher inflation rates. This increased cost of living disproportionately affects the most vulnerable citizens, as they struggle to afford basic necessities, which are now glaring across the country.
“The House is also worried about the reduction in investment, as the value of the naira continues to lose value and depreciates against the dollar and other foreign currencies, foreign investors may be deterred from investing in Nigeria, fearing potential currency losses, which is capable of stunting economic growth and hindering the creation of new job opportunities for unemployed Nigerian youth.
“The House is aware that 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 House is also aware that the Central Bank of Nigeria frequently uses its foreign reserves to stabilise the naira, but this can deplete its reserves, making the country vulnerable to economic shocks.
“The House is cognizant that addressing Nigeria’s financial challenges requires collective responsibility from all stakeholders, including Parliament, which has been the voice of the common man.”