Senator Ned Nwoko, who represents Delta North, moved to ban the use of dollars and other foreign currencies. The motion passed the first reading in the Senate.

Nwoko, who is also representing the Chairman of the Senate Committees on Reparations and Repatriation, called for the ban of foreign to strengthen the Naira, 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," he sponsored in the house in November 2024. 

Per the bill's position, all transactions must be carried out in Naira, including salary payments for local and expatriate workers. 

Knowing the CBN Rule that can ban the use of the Dollar, other foreign currency

The Central Bank of Nigeria's Act, 2007(No. 7) is legislation that empowers the CBN to regulate and oversee Nigeria's monetary and financial systems, which includes prohibiting the use of foreign currencies for payments in the country. Per this rule, the CBN can prohibit using foreign currencies for payments nationwide to strengthen the Naira.

Provisions of the CBN Rule that allow the ban on the Dollar, other foreign currencies;

  • All domestic payments and financial transactions, including local and expatriate workers, will be in Naira. 
  • Nigeria's exports, especially crude oil, should be invoiced to Naira to make buyers purchase the product there. 
  • If passed into law, the bill will curb the informal forex market and practices like currency round-tripping by banks, stabilising the exchange rates by reducing speculation and illicit flows. 

The Economic Impact of Banning Dollars and Foreign Currencies

Senator Ned Nwoko promotes the ban of the Dollar and other foreign currencies for all domestic payments premised on the economic benefits listed below; 

Increased Demand for Naira: Mandating all transactions, including high-value transactions and salary payments, will increase the demand in Naira for payments. 

Currency Volatility Reduction: Informal sectors like forex trading, which drives currency fluctuations and leads to currency volatility, will be reduced as speculative trading and foreign currency hoarding will be curbed. 

Cons of Banning the use of Dollar and Other foreign currencies in Nigeria

However, despite the possibility of strengthening the Naira against another dollar and other foreign currency, the CBN Act 2007, No. 7 poses major economic challenges if passed into law, except these areas of concern are addressed. 

Inflation: Nigeria's inflation rate is at an all-time high of 34.60%, which a good you bought for N1000 last month will now be N1,346. Inflation will only rise when importers cannot import goods and services in foreign currency, especially from countries with stronger currencies. 

Foreign investors: This will deter foreign investors whose business payments are made in dollars. This will also dissuade experts who are employed in Nigeria and wish to pay in Dollars to seek alternative options; companies like Julius Berger, amongst others, will be significantly affected.