A country’s currency is not just a medium of exchange—it represents its economic stability and national identity. Yet, in Nigeria, the naira has been steadily losing both its value and its relevance. Like many currencies in import-dependent economies, the naira has suffered from sustained depreciation, mainly driven by unrelenting demand for the US dollar and other foreign currencies to pay for imported goods and services.
Since President Bola Tinubu floated the naira in June 2023, its value has plummeted. In just one year—from June 2023 to June 2024—the naira lost a staggering 216.64 percent of its value, sliding from N471 per dollar to N1,482.72. By April 2025, the exchange rate had weakened further to N1,599.55 to the dollar. This rapid devaluation has fuelled inflation and drastically increased the cost of living, as almost every essential commodity is now priced higher due to currency instability.
Dollarisation and the Erosion of National Currency
In functional economies, the local currency is king. It serves as the primary means of transaction, allowing goods, services, and capital to circulate freely and efficiently. However, in Nigeria, a troubling trend has emerged: the increasing use of dollars for local transactions. From school fees to property rentals, dollar demands are becoming more common, pushing the naira further into irrelevance. Even local service providers like estate agents and jewelers have joined in this informal dollarisation, adding immense pressure to an already strained currency.
This trend isn’t limited to private businesses. Politically exposed persons often hoard their wealth in dollars, further undermining the naira. The situation worsens during election seasons when political spending causes sharp spikes in demand for foreign currencies.
Legal Framework: The Naira Is Still the Lawful Tender
Despite these challenges, the law is clear. Under Section 20 of the Central Bank of Nigeria (CBN) Act of 2007, only naira notes issued by the CBN are recognized as legal tender for transactions within Nigeria. Anyone who refuses to accept the naira for payment violates the law and is liable to penalties including fines or imprisonment.
Recently, the Economic and Financial Crimes Commission (EFCC) has begun enforcing this law more aggressively. A high-profile case involved a jeweler in Lagos who refused to accept naira for a $5,700 diamond watch. Following a sting operation by the EFCC, the vendor was convicted and sentenced to four years in prison or a fine of N650,000. While this action signaled some level of enforcement, it barely scratches the surface.
Token Punishments Are Not Enough
Targeting low-level offenders is not an adequate response. True change will come only when the government holds powerful offenders accountable—especially those in the political and business elite who openly violate currency laws by pricing goods and services in dollars.
Enforcing the law more stringently is just one part of the solution. Restoring public confidence in the naira requires deliberate and sustained efforts. The government must signal that the naira is not just symbolic—it is trustworthy, stable, and protected by policy.
Strengthening the Naira Starts With Government Action
To truly support the naira, the government must take a multi-pronged approach. First, it must rebuild confidence in the currency as a store of value. The depreciation of the naira has not yielded expected benefits such as lower petrol prices, even when global oil prices have dropped. This discrepancy only erodes trust further.
Also, the government must wage a more aggressive war against corruption. Many instances of dollar demand are not tied to legitimate trade but to money laundering. Political actors frequently convert stolen naira into dollars to stash abroad. Tackling this illicit financial activity is essential to stabilizing the local currency.
A Stronger Economy Means a Stronger Naira
Diversifying Nigeria’s economy is another key strategy. Overreliance on oil revenue makes the country vulnerable to external shocks. Expanding the manufacturing sector, boosting non-oil exports, and attracting foreign direct investment will help create a more balanced economy—and, by extension, a stronger naira.
Additionally, Nigeria must intensify efforts to close its huge import-export gap. When domestic production meets local demand, the pressure to source foreign currency diminishes significantly. Encouraging local industries through tax incentives, infrastructure development, and access to credit can help achieve this.
Reinforce the Use of the Naira Locally
Finally, there must be strict enforcement of laws mandating the use of the naira for all domestic transactions. Authorities need to send a clear message that pricing in dollars within Nigeria is unacceptable, illegal, and punishable. Government institutions, real estate developers, private schools, and all service providers should be held accountable.
The Central Bank of Nigeria, in collaboration with the EFCC and the Independent Corrupt Practices and Other Related Offences Commission (ICPC), must continue to monitor and prosecute violators without favoritism.
Conclusion: Reclaiming the Naira’s Value and Dignity
The naira should represent more than just a currency; it should reflect Nigeria’s economic sovereignty. Allowing the naira to weaken without a coordinated, aggressive response from both policymakers and the public sends the wrong signal. Nigerians must respect and use their local currency in daily transactions, while the government must restore the economic fundamentals that give the naira real value. Through tough anti-corruption measures, improved regulation, and economic diversification, Nigeria can reclaim the strength of its currency and secure a more stable financial future.
