Reps move to stop dollarisation, curtail foreign exchange use in Nigeria

The House of Representatives on Thursday recorded overwhelming support for a bill seeking to prohibit the use of foreign currency for local transactions and overhaul key provisions of the Central Bank of Nigeria (CBN) Act.

The legislation, jointly sponsored by the House Leader, Julius Ihonvbere (APC, Edo) and Jesse Onuakalusi (APC, Lagos), is designed to strengthen the operational framework of the apex bank, deepen transparency and ensure firmer institutional checks and balances.

During the debate, lawmakers argued that the country’s economic climate, marked by persistent volatility, an unstable exchange rate and growing concerns over the conduct of monetary policy, made the proposed amendments both timely and necessary.

They maintained that the existing Act no longer adequately reflects the realities of Nigeria’s financial system or the demands of modern monetary governance.

Leading the discussion, Mr Onuakalusi said recent national and global economic pressures had exposed various shortcomings in the current legislation.

He insisted that to maintain credibility in monetary management, the CBN must operate under a legal framework that guarantees autonomy, strengthens governance structures and improves accountability to both the public and the National Assembly.

According to him, the CBN plays a profoundly central role in stabilising the financial system, managing the country’s currency, safeguarding price stability and maintaining public and investor confidence.

However, he argued that lapses witnessed in recent years, including inconsistent policy communication, controversies surrounding foreign-exchange management and weaknesses in oversight mechanisms, expose gaps that must be urgently addressed.

“In recent years, ranging from government-concerned foreign exchange destruction, moral policy inconsistency, weak oversight mechanisms, to challenge witnesses around currency redesign and policy communication has exposed a structural gap in the Principal Act,” he said.

He explained that the bill proposes a clear separation of powers between the CBN Governor and the board chairman to prevent undue concentration of authority.

It also introduces a single, non-renewable six-year tenure for the Governor and key management officials, which he said would limit political interference and promote institutional stability.

He said, “The proposed amendments seek to separate the role of Governor and the Board of Directors, Chairman, to avoid concentration of powers, and ensure professional oversight.

“The second aspect this bill helps to ensure is to introduce a single six-year non-renewable 10-year contract, which is a very important part of the CBN Act.”

The proposed legislation also aims to establish a uniform exchange-rate framework and formally outlaw the use of foreign currency for domestic transactions except in regulated or authorised settings.

Mr Onuakalusi said this provision is intended to curb the widespread dollarisation of the economy, restore confidence in the naira and reinforce monetary sovereignty.

Additionally, the bill seeks to enhance financial stability oversight by empowering the CBN with clearer prudential tools and better-defined responsibilities, especially in managing systemic risks and responding to economic shocks.

Joining the debate, Alhassan Ado-Doguwa, offered historical context by revisiting the controversial naira redesign introduced under former President Muhammadu Buhari.

Mr Ado-Doguwa said the experience demonstrated the danger of major monetary decisions being taken without structured legislative scrutiny.

He noted that the policy, introduced in the heat of an election cycle, sparked widespread hardship and confusion across the country. According to him, it appeared to have been championed by certain policy actors rather than the president, suggesting a level of disconnect and weak institutional coordination.

Mr Ado-Doguwa insisted that the new bill is institutional and not targeted at the current CBN Governor.

“I have not seen where the bill is targeting or intending to strengthen or empower an individual. It is, of course, an institutional bill, and I want to take special interest in the fact that I remember we had a challenge.

“Suddenly, overnight, the policy makers, not even the driver and the leader of the regime, the leader of that government, who was in the driver’s seat, it was like a connivance. They suddenly came up with what they call the Naira redesign, pushing the government to take a policy that was apparently not a popular policy at a time when the nation was facing an election process,” he said.

He argued that any future attempt to redesign the naira, change its denomination or introduce other far-reaching monetary reforms must be subject to legislative approval. He commended the proposed requirement for a mandatory 90-day public notice period, saying it would protect citizens and ensure transparency in monetary-policy decisions.

He reminded his colleagues that during the last redesign episode, the House set up an ad-hoc committee, which he chaired, to interface with the former president over the policy.

“The intention to redesign the naira then was not a good one. It was in bad faith,” he said, adding that the absence of legislative involvement contributed to the chaos that followed.

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Mr Ado-Doguwa argued that the new bill “returns power to the people” by ensuring that the National Assembly, representing the wider interests of Nigerians, is fully involved in any major changes to the country’s currency.

After the debate, the bill received overwhelming support through a voice vote.

Deputy Speaker Benjamin Kalu, who presided over the session, subsequently referred it to the House Committee on Banking Regulations for further legislative work.

The committee is expected to review the bill’s provisions, consult stakeholders and present its findings to the House for consideration at the next stage.