The Federal Government has taken a significant step towards promoting fiscal discipline and reducing dependence on foreign currencies by directing all Ministries, Departments, and Agencies (MDAs) to desist from entering into contracts denominated in foreign currencies. According to the 2025 Appropriation Act Implementation Guideline, all MDAs are required to ensure that their contracts are wholly denominated in Nigerian Naira. The guideline, issued by the Budget Office of the Federation, also stipulates that no MDA is authorized to enter into any contract denominated in a foreign currency without the prior approval of the Minister of Finance and Coordinating Minister of the Economy.
This move is part of the government’s broader effort to strengthen local industries and reduce import dependency. President Bola Tinubu’s administration has emphasized the importance of prioritizing Nigerian goods, services, and know-how when spending public funds. The Minister of Information and National Orientation, Mohammed Idris, said the directive “puts Nigeria at the center of every kobo the government spends,” adding that an Executive Order to give it full legal force is underway. The policy mirrors US President Donald Trump’s “America First” doctrine, aiming to promote domestic production and reduce reliance on foreign goods.
The new guideline also imposes strict reporting obligations on MDAs, requiring them to submit monthly Budget Performance Reports to the Budget Office using a prescribed format. Failure to comply will result in MDAs being ineligible for subsequent capital or recurrent budget releases. Additionally, the government has introduced new rules on personnel cost management, including monthly and quarterly reviews of nominal rolls to eliminate unjustified payroll entries and allowances. MDAs are also required to submit monthly reconciliations of non-regular allowances received as part of personnel emoluments.
Experts have welcomed the directive, describing it as a necessary step towards addressing Nigeria’s persistent foreign exchange challenges. According to Dr. Aliyu Ilias, a development economist, many of the country’s forex problems stem from a culture of denominating salaries, contracts, and transactions in foreign currencies. He called for a stricter approach, suggesting that the government should prohibit dollar-denominated contracts outright. Adewale Abimbola, a Lagos-based economist, noted that the policy is designed to minimize corrupt practices around procurement, but its success will depend on strict monitoring and enforcement of punitive measures against defaulters.
The Federal Government’s new directive is expected to promote transparency and accountability in government spending, while also boosting the local economy. By prioritizing Nigerian goods and services, the government aims to stimulate domestic production, create jobs, and reduce reliance on foreign imports. The policy is part of a broader effort to enforce discipline in budget execution and ensure alignment with fiscal targets set out in the 2025 budget.
