Recently, the Nigerian Economic and Financial Crimes Commission (EFCC) an anti-graft agency responsible for the investigation and prosecution of alleged financial crimes and offenders in the country issued a warning to schools, hotels, and other businesses operating in Nigeria against transacting businesses in US dollars.
This warning came amidst concerns over the increasing use of foreign currency for transactions within Nigeria thereby affecting the value of the national currency the naira.
The use of dollars for transactions within Nigeria is against the provisions of the Central Bank of Nigeria (CBN) Act 2007 as amended, which states, among other things, that “the currency notes issued by the Central Bank shall be legal tender in Nigeria for the payment of any amount” for goods and services.
The indiscriminate use of foreign currencies especially the dollar has continued to put undue pressure on the naira, compromising the country’s monetary policy and its sovereignty.
The CBN has implemented various policies to stabilize the economy, increase foreign exchange (FX) inflows, and prevent the devaluation of the naira.
In January 2024, the CBN introduced new measures for financial institutions to manage foreign exchange risks and ensure accurate reporting.
These policies were created to stabilize the naira, which has been declining in value due to inflation and transactions in foreign currencies within Nigeria.
The EFCC’s action was a legitimate response to the use of foreign currency, which often involves illegal or illicit activities such as tax evasion, money laundering, and cases of undocumented transfers to offshore accounts that necessitated the EFCC to curtail its use in the informal sector and promote adherence to CBN laws.
The use of foreign currency is a drain on Nigeria’s foreign reserves, which affects its ability to invest in infrastructure and development.
By enforcing laws that require transactions to be conducted in naira, the EFCC is promoting compliance with laws crucial to Nigeria’s economic sustainability.
Despite the challenges associated with transacting in naira, the EFCC intervention to protect the naira presents an opportunity for businesses to explore alternative payment options that reduce their reliance on foreign currency and promote financial inclusion.
International financial standards require investing in financial technologies that facilitate currency purchasing power like the naira used for transactions and businesses that can reduce their exposure to foreign exchange risk and regulatory challenges, thereby improving the country’s economic prospects as part of long-term measures.
Although, the EFCC’s intervention would have short-term effects on businesses that rely on foreign currencies like the dollar; there is the need to promote compliance with existing laws that foster economic stability necessary for development.
Therefore, businesses in Nigeria should take advantage of the opportunities to explore alternative payment systems to reduce their overreliance on foreign currency and promote financial inclusion towards maintaining financial stability and integrity in the country.
Nigeria and the rest of Africa should begin to look inwards and develop economic parameters that work within the continent and desist from depending on foreign economic policies to their advantage, not Africa.
Nigeria’s regulatory agencies like EFCC, ICPC, and others should not look back when it comes to applying policies aimed at deepening the nation’s economic growth and stability for the desired development.
A stable currency in Nigeria or any African country will provide the needed impetus for the attraction of Foreign Direct Investments (FDI) to Africa, necessary for the required growth and development of the continent.
