The Federal Government is contemplating a policy shift that would lead to the conversion of foreign currencies held in citizens’ domiciliary accounts to the Nigerian naira in an effort to stabilize the national currency.
If the plan is implemented successfully, the government will mandate the conversion of foreign currencies residing in both individual and corporate domiciliary accounts to naira at a rate determined by the Central Bank of Nigeria (CBN). A source from the Presidency highlighted that the issue of forex scarcity and the depreciation of the naira primarily affects the elite, emphasizing that the government is committed to addressing the practice of individuals hoarding foreign currencies to the detriment of the naira.
The source pointed out, “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.” The source also emphasized that keeping dollars in domiciliary accounts is not a common practice globally and stressed the need to address this issue both politically and economically.
The source further disclosed that there is over $30 billion in domiciliary accounts in Nigeria, which raises concerns about the necessity for such large amounts to be held in foreign currencies. The government aims to discourage the hoarding of foreign currencies and is considering enforcing the automatic conversion of foreign exchange earnings to the local currency for individuals and companies.
The government’s interest in attracting funds held in domiciliary accounts and those held by Nigerians abroad into strategic investments was highlighted back in September 2023. The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, indicated the potential of substantial foreign exchange sources within Nigeria and outlined plans to create a conducive environment to attract these funds into the local economy. The government seeks to encourage Nigerians to invest in the country and utilize foreign holdings for economic development, job creation, and increased reserves.
