The Nigerian House of Representatives has recommended that the Central Bank of Nigeria (CBN) alter its approach to address the weakening Naira in the foreign exchange (FX) market. During a recent plenary session presided over by Deputy Speaker Mr. Benjamin Kalu, lawmakers discussed the impact of the dwindling Naira against the US Dollar and other currencies on the Nigerian economy.
The session began when Mr. Ismaila Haruna Dabo proposed a motion urging the CBN to tackle the issue. Concerns were expressed about the rapid depreciation of the domestic currency, particularly in the parallel FX market, with lawmakers calling for an urgent shift in strategy. They emphasized the need for a more holistic approach to improve the production and manufacturing sectors, rather than just making short-term policy adjustments.
One lawmaker, Mr. Ademorin Kuye, pointed out the problem of substituting the Naira with the Dollar as legal tender in Nigeria and suggested ending the practice of charging Nigerians in Dollars for goods and services.
Mr. Dabo, the initiator of the motion, expressed concern about the reduction in foreign investment due to the weak local currency, which deters foreign investors who fear potential currency losses. A weaker Naira could increase external debt servicing costs, reducing government spending on essential sectors like healthcare and education.
After a debate, the House of Representatives urged the CBN to implement monetary policy adjustments to stabilize the Naira, address speculative activities in the forex market, and increase the Naira’s withdrawal limit to reduce the demand for Dollars and other foreign currencies. Additionally, the government was advised to formulate policies and structural reforms to reduce corruption and promote economic diversification. The government was encouraged to boost confidence in its fiscal and monetary policies, promote exports, and reduce imports.
The House also tasked its Committees on Banking Regulations and National Security and Intelligence to work with the CBN to initiate compliance strategies and investigate the use of US Dollars and other foreign currencies as legal tender for domestic transactions in Nigeria.
As of Thursday, the Naira depreciated further against the Dollar in the black market, reaching N1,045 compared to the previous rate of N1,030/$1. These measures and recommendations aim to address the Naira’s ongoing depreciation and its impact on the Nigerian economy.
