The federal Government is worried by the use of dollar as means of payment or legal tender in the local market in Nigeria. The practice is seriously affecting the value of naira as most Nigerians are fast losing confidence in the local currency as a store of value.
The naira is the only legal tender in the country but in most parts of Nigeria, Lagos and Abuja in particular, lands are sold in dollars, prices of some products are denominated in dollars, school fees are quoted in dollars and hotels charge and collect dollars for rooms and other services. In Japan and other developed countries, payments for any local transactions are done in the local currency unit; their nationals insist on payment for goods and services in local currency.
Reacting to reporters question on the use of dollar in Nigeria local market CBN Governor Mallam Sanusi Lamido Sanusi said that the dollarisation of the Nigerian economy is of serious concern to the President, the Central Bank of Nigeria, the Economic management team and every body and that the CBN is coming up with a policy to stop the practice.
He said that as a first step, the CBN will soon stop the cash sale of dollars to Bureaux De Change, where members of the Nigerian public usually make their purchases of dollars in cash to make transactions within the country.
Mallam Sanusi Lamido Sanusi at the joint briefing to mark the end of the 2012 IMF/World Bank Annual Meetings with Dr Okonjo-Iweala in Tokyo Japan said that the idea of introducing the N5, 000 note was to check mate the practice of the movement of huge funds around the country in dollars. Sanusi whose proposal to introduce the N5, 000 currency note into the Nigerian market was halted by the federal government following heavy criticism against the move, said the introduction of the N5, 000 note was to check the dollarisation of the Nigerian economy by providing Nigerians with heavy cash transaction and a higher denomination.
His words, “The dollarisation of the economy is a big problem for all of us and it is something that we are going to walk towards taking stopping. One major plank of solving the problem of dollarisation was the N 5, 000 note, because that is one of the reason people go for dollars, and that is the reality; if you have inflation over a long time; if you have had devaluation over sometime; your currency, because the naira is not just a medium of exchange but also a store of value, if your currency loses its position as a store of value, you have a problem. “People carry $10, 000, that is N1.5 Seventy per cent of the dollars people buy from the BDCs is not for transactions outside Nigeria. They move dollars from one part of the country to another. In fact, from one part of Abuja to another.
“In a brief case, you can carry a $100, 000. That is about N15 million. Now part of the logic for introducing higher denomination is to provide genuine high-value cash users with a note that is a store of value as a first step towards our attempt to eliminate the use of dollar to move cash around because the dollar has became the second national currency”.
The CBN boss who revealed that even President Goodluck Jonathan was worried over the development said that under the new policy to be announced shortly, transactions between the apex bank and BDCs, on the one hand, and between BDCs and their customers would be done online.
He explained further that those who honestly need to make payments outside the country would have the recipients paid directly from the bank accounts of the BDCs or take the option of buying travellers’ cheques. According to him, “we are worried about it. The president is worried about it. We are all worried about it and we are coming with a fresh policy to stop selling cash dollars to BDCs.
“We will credit their accounts. If you want to pay for medical bills abroad, you give the hospital account. If you want to pay school fees, you do transfer like everybody else.
“If you want to travel, you buy travellers’ Cheque or get money on your cards, instead of people moving around with dollars. But what is happening now is that if you want a N2 million transaction, you have to carry bags of naira cash. And this was part of the logic of bringing in a higher denomination for people who do high-volume cash transaction to reduce the amount of paper money they carry along.
“I am glad that you asked that question because you are now beginning to think about some of the concerns that we have as managers of the economy because you have to print so much paper money and it is because people don’t want to carry so much papers in cash that they are carrying dollars and we cannot let it continue to happen. In America you cannot transact business with Pounds Sterling. You cannot and we will deal with it. It will stop”.
