FG Considers Going After Domiciliary Accounts With Dollars

The Federal Government is exploring a programme that will convert foreign cash in people’s domiciliary accounts to naira in order to stabilise the national currency.

If the proposal is successful, the government will order the conversion of foreign currencies held in individuals’ and business organisations’ domiciliary accounts to naira at a rate specified by the Central Bank of Nigeria.

One of the Presidency insiders told Punch that the problem of forex scarcity and the naira’s decline was an elite issue and that the Federal Government would not stand by and let some individuals stockpile foreign dollars at the expense of the naira.

The source told the publication, “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. Invariably, that is when governors collect FAAC (Federal Account Allocation Committee) allocations. Whatever the connection, we don’t know.

“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. Genuine demands driven by economic activities can’t bring this huge pressure. By June, dollar demands are supposed to have gone down when Dangote Refinery must have started.

“Nobody should keep a domiciliary account if they do not have legitimate foreign currency earnings like salary or getting foreign exchange revenue, either as an individual or as a company. Even if you have foreign exchange inflow as a result of your work, immediately after the money lands in your account, the banks should automatically change it to the local currency and your local currency account will be credited with the equivalent value.

“In Nigeria today, there are over $30bn in domiciliary accounts of individuals. It is in the CBN account. The records are there. It is not right. These are issues we will have to deal with. In other countries, dollars are not meant to stay in peoples’ accounts.”

In September 2023, the Nigerian government stated that it hoped to attract funds kept in domiciliary accounts as well as those held by Nigerians overseas to make large investments in many sectors of the economy.

Mr Wale Edun, Minister of Finance and Coordinating Minister of the Economy made the announcement during a press event in Abuja.

Edun stated that Nigerians have substantial quantities of money in domiciliary accounts and abroad that can be used to revitalise the economy and that his team is trying to create the conditions necessary to draw such monies into the local economy.

The minister had said, “What we can see is that really, there are quite substantial sources of foreign exchange in Nigeria.

“There is a lot of cash outside the system, which if brought into the system, increases the money supply of dollars, increases in reserves and so forth.

“There are funds in domiciliary accounts, which if you give people the incentives they will utilise for investment in Nigeria.

“Nigerians in Nigeria have huge holdings of foreign currencies in banks and financial institutions abroad.

“We need to provide the environment that brings those funds home to choose to invest in the Nigerian economy rather than foreign economies, which is what they are doing right now.

“If you place money in a bank abroad, you’re investing in a foreign economy. Finally, we also have a huge source of funds from the Diaspora.

“Nigerians living and working abroad, who of course, have their families here and who are interested in keeping a presence here; we have to encourage them to be willing to save in Nigeria, perhaps by improving payment mechanisms; so we have to do a lot to aim at them.

“There is plenty of hope and it is our determination to put in place the kind of structures and incentive framework that brings Nigeria money abroad and even Nigeria money outside the system into the financial and economic system to work, to create jobs for Nigerians.”

A Gentle Reminder: Every obstacle is a stepping stone, every morning; a chance to go again, and those little steps take you closer to your dream.

Nnamdi Okoli