The naira is legal tender because it is "backed by law".
Legal tender is a form of payment that is recognized by law as valid for meeting financial obligations. In Nigeria, the naira is the legal tender and it is backed by the Central Bank of Nigeria Act (2007), which gives the currency its legal status.
This means that any debt or financial obligation in Nigeria can be legally discharged by payment in naira. Additionally, the law requires that all transactions within the country be conducted in naira, further reinforcing its legal tender status.
In order for a currency to be recognized as legal tender, it must be backed by the government or a central authority, and it must be widely accepted within the country. The naira meets both of these criteria, as it is the official currency of Nigeria and is accepted in all financial transactions within the country.
In summary, the naira is legal tender because it is recognized and backed by law, making it the official and widely accepted form of payment for all financial obligations within Nigeria.