NAIJA NEWS
In a bold move to stabilize the Nigerian naira, the Federal Government is reportedly contemplating a policy that would see the conversion of foreign currencies in domiciliary accounts into naira.
This drastic measure comes in the wake of the naira’s unprecedented depreciation earlier this week, marking its worst performance in history by falling 24 per cent to close at N1,348 per dollar in the official Nigerian Foreign Exchange Market.
Top sources within the Presidency revealed that the proposed policy would involve ordering the conversion of idle foreign currencies in both individuals’ and corporate organizations’ domiciliary accounts into naira at a rate to be determined by the Central Bank of Nigeria (CBN).
The initiative aims to address the current forex scarcity and bolster the struggling national currency.
A Presidency source confided in Punch, emphasizing that the issue of forex scarcity and the naira’s depreciation is predominantly an “elite issue.”
The source further noted that the Federal Government is determined to take decisive action against those hoarding foreign currencies, which has been to the detriment of the naira’s value.
The source said, “The problem of dollar scarcity is an elite problem. You will notice that this happens at the end and the beginning of a new month. That is when the exchange rate goes up. Invariably, that is when governors collect FAAC (Federal Account Allocation Committee) allocations. Whatever the connection, we don’t know.
“There is no country in the world where people open domiciliary accounts to keep dollars. It happens only in Nigeria. This must be addressed. This is not only a political issue, but it is also an economic issue that must be addressed. Genuine demands driven by economic activities can’t bring this huge pressure. By June, dollar demands are supposed to have gone down when Dangote Refinery must have started.
“Nobody should keep a domiciliary account if they do not have legitimate foreign currency earnings like salary or getting foreign exchange revenue, either as an individual or as a company. Even if you have foreign exchange inflow as a result of your work, immediately after the money lands in your account, the banks should automatically change it to the local currency and your local currency account will be credited with the equivalent value.
“In Nigeria today, there are over $30bn in domiciliary accounts of individuals. It is in the CBN account. The records are there. It is not right. These are issues we will have to deal with. In other countries, dollars are not meant to stay in peoples’ accounts.”
If implemented, this will be a major policy shift by the President Bola Tinubu administration, which said in September 2023 that it was looking to attract funds held in domiciliary accounts and those held by Nigerians abroad into massive investments in various sectors of the economy.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had disclosed this at a press briefing in Abuja.
According to him, Nigerians have huge funds in domiciliary accounts and hold large sums abroad, which can be deployed to rejuvenate the economy, adding that his team was working to provide the needed environment to attract such funds into the local economy.
Connect with us on our socials: