Foreign currency transactions and the law

folarin okunola

May 14, 2015 1:03 PM

Some companies are known to price their goods and services in foreign currencies and also demand payment in these currencies rather than in the Naira.

Dollars

The Central Bank of Nigeria in a recent press statement signed by the Director of corporate communications, noted with obvious disappointment the increasing use of foreign currency in the domestic economy as a means of payment for goods and services rendered by individuals and corporate bodies.

Some companies are known to price their goods and services in foreign currencies and also demand payment in these currencies rather than in the Naira. The apex bank warned that this practice was an offence and liable to be punished by a fine or up to six months imprisonment.

This therefore essentially examines the legality or otherwise of the use of foreign currencies in property transactions in Nigeria. In addressing this issue, two pieces of legislation were called to aid namely; the CBN Act of 2007 and Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (FOREX Act).

Goods or services in Nigeria can be priced in foreign currency, but the vendor or service provider is bound to accept Naira equivalent of same, if the payer chooses to pay in Naira. If the payer chooses to pay in foreign currency (acceptable to the Payee) the payee must lawfully accept same. Under the FOREX Act, any person is allowed to open, maintain and operate a domiciliary account designated in foreign currency (any internationally convertible currency) with an Authorized Dealer (licensed bank in Nigeria).

In conclusion, the Naira is the legal tender in Nigeria for payment of goods and services of any amount. However, Nigerian entities/individuals can price their goods or services in foreign currency but should be willing to accept the Naira equivalent of the said foreign currency. This is because a refusal to accept Naira as a means of payment is an offence, as stated by the law. A Vendor or a Service Provider may state its preference to be paid in a particular foreign currency but the discretion of paying in that particular foreign currency rests on the payer.

folarin okunola