A domiciliary account is a bank account that allows you to deposit, withdraw and transact in currencies other than your local fiat currency. With the rate at which the Nigerian Naira has been losing value over the years against other major currencies, the importance of saving in a more stable currency can not be overemphasized for individuals concerned about their long-term financial well-being.
Citizens entrust their governments with the responsibility of maintaining the economy and stabilizing the local fiat currency, which they use as a store of value.
But governments are very large organizations composed of many moving parts. Any poor decisions from any of the moving parts can have devastating consequences for the economy and the citizens. Most people often assume that government corruption and embezzlement pose the greatest risk to the economy, but in reality, wrong policies and poorly designed policies do more damage. For example, Nigeria’s refusal to fully deregulate its oil sector has cost the economy billions. Rampant corruption and incompetence in the maintenance of infrastructure has left the country’s oil industry in tatters.
Benefits of a domiciliary account
Everyone deserves a chance to be the master of their destinies. Losing your entire life savings due to the incompetence of your country’s economic managers is just unforgivable especially when there is an alternative solution.
The biggest importance of a domiciliary account is that you can use it to save and hedge against inflation in your local economy. 10 million Nigerian naira in 2015 was about $55,600, which was quite impressive for an average Nigerian. That same amount left in a bank to accrue compound interest at the prevailing rate of 1.5% will be worth about 11,098,449 naira today. This might sound good except that 11 million naira is only worth about $15,400 because the naira has been steadily loosing value against the dollar.
On the other hand, if in 2015 you converted that same 10 million Naira and saved it in dollars in a domiciliary account. Today you would have $55,600 plus interest, which is over 40 million naira today!
Access to foreign market
The persistent dollar scarcity in Nigeria has forced the CBN to enact some stringent forex policies. Nigerians can no longer make dollar payments with their naira cards, and importers have to go through stringent Form M to get dollars to subsidized dollars to import items into the country.
All these means that as a Nigerian entrepreneur who wants to place ads on Facebook or buy items from outside the country, you have to source for your own dollars. The easiest way to do this is to open a domiciliary account, buy dollars from the black market and use it to fund the account. Black market dollars might be expensive to buy, but it is the easiest way to source for dollars.
How does a domiciliary account work?
A domiciliary account allows you to save, withdraw and make financial transactions in currencies other than your local fiat currency. In Nigeria, entrepreneurs that need dollars to place ads online or purchase items can simply use their domiciliary account and avoid all the restrictions placed by the CBN.
The requirements for opening a domiciliary account in Nigeria include; two passport photographs, BVN, two current account or domiciliary account holders to serve as referees and a customer biodata form.
UBA bank offers a Freedom account that does not require the two referees, only BVN and biodata form is required but the account will have to be upgraded when the customer reaches a $2,000 withdrawal..
Dollar withdrawal from a domiciliary account is usually done over the counter at the bank branch. Walk into any of your bank’s branches and request a dollar withdrawal form, your BVN will be verified and if it matches your identity you will be paid immediately in cash.
Funding a domiciliary account can be done at any bank branch you have an account with. Simply walk in and request a deposit slip if you have foreign currencies, if not you can buy some at the black market and deposit them over the counter at the bank.
Yes, a domiciliary account is also sometimes called a dollar account. The reason a domiciliary account is also called a dollar account is that dollar is the most popular and most widely used currency in the world. Although dollars can be deposited in a domiciliary account, other major currencies such as the British Pounds and Euro can also be deposited in the same account.
No, domiciliary accounts cannot be funded with Naira. You can however use the naira to purchase dollars at the black market which can then be used to fund the domiciliary account.
It depends on the bank and the type of domiciliary account you want to open. UBA bank has a minimum opening balance of $100 and a minimum running balance of $50. The Minimum opening balance and running balance on the UBA Freedom domiciliary account is $0.