Federal Government Contemplates Converting Foreign Currencies in Domiciliary Accounts to Naira

The Federal Government is contemplating a policy shift aimed at stabilizing the national currency by converting foreign currencies held in the domiciliary accounts of citizens into the local currency, the naira.

If the proposal comes to fruition, the government will mandate the conversion of foreign currencies in both individual and corporate domiciliary accounts to naira, with the exchange rate to be determined by the Central Bank of Nigeria. A source within the Presidency informed Punch that the initiative is a response to the forex scarcity issue and the depreciation of the naira, particularly pointing out that the problem is more prevalent among the elite.

The source emphasized that the government is unwilling to passively observe certain individuals hoarding foreign currencies to the detriment of the naira. It was mentioned that the scarcity of dollars tends to peak at the end and beginning of each month, coinciding with the disbursement of Federal Account Allocation Committee (FAAC) allocations to governors.

The source highlighted, "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." The source also questioned the legitimacy of maintaining domiciliary accounts without legitimate foreign currency earnings.

Currently, there are reportedly over $30 billion in domiciliary accounts of individuals in Nigeria, a situation the source deemed inappropriate. The government aims to address this issue, emphasizing that in other countries, dollars are not meant to linger in people's accounts.

This move aligns with the government's previous statement in September 2023, expressing the intention to attract funds from domiciliary accounts and those held by Nigerians abroad into substantial investments across various sectors of the economy. The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, highlighted the existence of significant foreign exchange sources within Nigeria and urged creating an enabling environment to attract these funds for local economic development.