There is currently a growing practice of trading goods and services in Nigeria in foreign currency, particularly the US dollar, instead of the local currency of Naira. Some hotels charge their guests, particularly foreigners, in dollars for accommodation and hospitality services. Some tenement buildings are let out to expatriates and companies in dollars by landlords. Even some schools in the country bill students in US dollars.
Although, it has been a practice that has been going on for a long time, is it legal? Why should payments be made and received in Nigeria using US dollars and other foreign currencies when the unit of currency of the country is Naira?
The Central Bank of Nigeria is the autonomous body with overall control and administration of the country’s monetary and financial sector policies. Part of the objects of the CBN is to issue legal tender currency in Nigeria and promote a sound financial system in the country.
The Central Bank of Nigeria Act 2007 is the current statute that lays out the legal framework within which the CBN operates. Section 15 of the CBN Act provides:
“The unit of currency in Nigeria shall be the Naira which shall be divided into one hundred kobo.”
Section 20(5) of the Act also provides that:
“A person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of N50,000 or 6 months imprisonment.”
From the provisions of the above statute it appears that it is illegal to refuse payment for goods and services in Naira.
The Central bank of Nigeria released a circular dated April 17th 2015, where it categorically stated that it is illegal for any product or service in Nigeria to be priced in any foreign currency other than the Naira:
“Based on the above provision (of the CBN Act) the general public is hereby warned that it is illegal to price or denominate the cost of any product or service (visible or invisible) in any foreign currency in Nigeria and no business offer or acceptance should be consummated in Nigeria in any currency other than the Naira”
The circular makes it clear that demanding payment for any product or service within Nigeria in any foreign currency is illegal. Also any contract or business offer or acceptance in foreign currency is also illegal.
The Central Bank of Nigeria published a further directive dated May 21st 2015 giving a list of agencies that are exempted from strictly accepting payments in Naira. The exemption allows the following agencies receive and accept payment in foreign currencies:
1. Foreign Inland Revenue Service
2. Nigerian Ports Authority
3. Nigerian Maritime Administration and Safety Agency
4. Federal Airport Authority of Nigeria
5. Nigeria Airspace Management Agency
6. Nigeria Shippers Council
7. Operators in the Oil and Gas sector including Oil Service companies
8. Operators in the Maritime and Aviation industries
9. Licenses operators in the export processing and free trade zones
10. Any other agency that may be prescribed by CBN from time to time.
The above list is the current list of those exempted from strictly demanding and receiving payments in Naira. It is conclusively illegal for any person, business, school or agency not on the exemption list, such as landlords, hotels or businesses operating in Nigeria to bill and receive payment from customers, guests, clients, students or tenants in US dollars or any other foreign currency.
The CBN Governor, Mr Godwin Emefiele, was quoted in the March 24th 2015 edition of The Premium Times as saying:
“The official currency for doing business in Nigeria remains the Naira. Collecting rents or school fees in dollars in Nigeria is illegal. We like to advise those involved in these practices to desist from them, because CBN would very soon begin to go after them.”
To view the April 17th 2015 circular of the CBN, please click here
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