The Nigeria House of Representatives has called on the Central Bank of Nigeria to implement monetary policy adjustments to stabilise the currency, 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 House also urged the Federal Government to formulate policies and structural Reforms to reduce corruption and promote economic diversification within the nation’s economy.
This was a sequel to the adoption of a motion on “The Need for the Central Bank of Nigeria to Address the Impact of the Failing Naira against the Dollar and other Currencies on the Nigerian Economy” moved by Ismaila Haruna Dabo, a member from Bauchi State, at plenary.
Haruna-Dabo observed that 90% of Nigeria’s total export earnings are from oil, but changes in the price of oil around the world have a big impact on the country’s foreign exchange market, which explains why the naira has continued to depreciate.
According to the motion, “depreciating naira makes imported goods more expensive, leading to higher inflation rates.
“In June 2023, President Tinubu through the Central Bank of Nigeria announced changes to the country’s foreign exchange market, that is, the foreign currencies can now be bought and sold at rates determined by the market and not by the central bank.
Also, he noted that the President 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 a dollar shortage.
“About 90% of Nigeria’s total export earnings are from oil, which is the mainstay of the country’s economy, but changes in the price of oil around the world have a big impact on the country’s foreign exchange market, this explains why the naira has continued to depreciate.
“Nigeria’s foreign exchange inflows are lagging despite unification in June, with high demand for foreign currency and limited access to official markets incentivizing black market purchases, the naira has lost a greater per cent of its value against the dollar, falling from N778.602/$ as of September 26, September 2023, and nearly N1000/$ at the parallel market, making it the first time Nigeria has liberalized the foreign exchange market.
“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 necessities, which are now glaring across the country,” he said in the motion.
The lawmakers also said that the Central Bank of Nigeria (CBN) frequently uses its foreign reserves to stabilise the naira, but that this can deplete its reserves, making the country vulnerable to economic shocks.
“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; 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,” he said.
Contributing to the debate, a member from Lagos State, Hon Ademorin Kuye, urged the federal government to criminalize the use of the dollar as the legal tender for the payment of school fees by some private schools in Nigeria.
Other lawmakers who contributed, stressed the need for the federal government to encourage agriculture at all levels to promote exportation and reduce importation of agricultural products.
The House thereafter urged the Federal Government to promote exportation and reduce importation by enhancing foreign investors’ Confidence in its Fiscal and Monetary Policies.
It also mandates the Committees on Banking Regulations and National Security and Intelligence to interface with the Central Bank of Nigeria to initiate compliance strategies; and
The House also mandated the Committee on Banking Regulation to investigate the use of US Dollars and other foreign currencies as legal tender for domestic transactions in Nigeria.
