ALL LOCAL BUSINESS TRANSACTIONS MUST BE IN NAIRA - CBN

The Central Bank of Nigeria on Tuesday warned schools, landlords and other business enterprises against demanding foreign currencies for the settlement of transactions carried out within the country.

The CBN Governor, Mr. Godwin Emefiele, gave the warning while briefing journalists shortly after the end of the two-day Monetary Policy Committee meeting, which was held at the central bank’s headquarters in Abuja.
Emefile said the official currency of the country remained the naira and warned that the central bank would no longer tolerate what he described as the “dollarization” of the economy.
The CBN governor said if the development remained unchanged, the bank would be forced to go after such organisations that were in the habit of demanding foreign currencies for the settlement of transactions.
He said the bank had identified the practice as one of the reasons for the high pressure on the naira.
Emefiele said, “There is a need for us to continue to imbibe fiscal discipline as much as we will see whatever can be done to build the Excess Crude Account; but from our side at the CBN, we are going to be taking certain actions that will nip some of the demands that are not useful in the bud.
“You have heard the incidence of partial dollarization of the economy. We will take actions to prevent that; the currency for doing business in Nigeria remains the naira and we will be looking at areas where people are making demands for foreign currencies.
“People who are landlords that are asking for rents in dollars; schools are asking for school fees in dollars or transacting business in dollars.
“This is illegal in Nigeria and we will like to advise those who are involved in this practice to desist from it because the CBN will in due course come after them.”
When asked what the outlook for the naira would be within the next few months, the governor said some of the recent measures taken by the CBN would help to reduce the pressures on the nation’s currency.
Some of the measures, according to him, are the improvement in supply of foreign exchange, deepening of the market and cutting what he described as ineffective demand.
Emefiele expressed optimism that after the elections, confidence in the naira would improve and the economy would move in an upward direction.
He said, “The exchange rate in the bureau de change market is going for N220 but I will like to say that this is a shallow market compared to the interbank market in terms of percentage in the foreign exchange market; it is, in my view, very insignificant and that market deals mainly in transactions that are not documented, and for that reason, we will not be looking at the outlook for the naira by looking at the BDC rate.
“But if you look at the outlook based on the interbank, which is on the average of N198, I believe that given the pressures that we have seen in the market as a result of the drop in crude oil prices and the pressures that have come with it, that adjusting the currency at the level it is now is okay and it is still sufficiently appropriate.
“But a number of measures have been taken in terms on improving supply, deepening the market and looking at areas where demand pressures can be cut and demand inefficiencies can be cut.
“I am sure that in due course, the central bank will begin to take actions that will look at areas where people make demands that are not effective, demands that we think are not useful for the economy.
“We will try as much as possible to control these to ensure that we look at the interplay between demand and supply, and what we will start to see is effective appreciation of the currency.”