A Senior Advocate of Nigeria, Femi Falana, has sued the Central Bank of Nigeria (CBN) over the ‘dollarisation of the Nigerian economy’.
Falana in the suit marked FHC/L/CS/476/23, filed at the Federal High Court in Lagos, is asking the court to determine amongst others “whether by virtue of Section 16 of the Central Bank Act, the exchange rate of the naira shall be determined, from time to time, by a suitable mechanism devised by the Bank for that purpose?”
The human rights lawyer claimed that “the seeming non-performance of the defendant’s statutory obligations culminated in dollarisation of the country’s economy which has, in turn, affected the country’s economy negatively contrary to the objectives of the defendant as enshrined in Section 2 of CBN Act.”
Arise News Television reports that in a 10-paragraph affidavit in support of the Originating Summons deposed to by one Mr. Ayodele Aribisala, Falana argued that the CBN had allowed many landlords in Lagos, Abuja, Port Harcourt and other cities in Nigeria for which the apex bank was established to serve to collect rents in dollars.
“The Defendant has refused to stop the collection of school fees and rents in dollars in Nigeria,” he said.
The senior lawyer argued that the dollarisation of the Nigerian economy and the failure to address the multiple exchange rates further pushed the naira to its current fluctuating state.
Falana recalled that in 2015, one dollar was exchanged for N178, but in 2022, it was exchanged for N750. He further argued that the multiple exchange rate regime led to the emergence of different exchange rates in the three major segments of the foreign exchange market namely: the official market, the Investors and Exporters window (also known as NAFEX) and the parallel market.
He said, “That the failure of the defendant to perform its statutory duties has resulted in the constant devaluation, depreciation and unending plunge of the naira.
“That the resultant effect of the abdication of defendant’s statutory duties has also affected the country’s economy and many businesses adversely.”
In the written address in support of the suit filed on his behalf by Mrs. Funmi Falana, the plaintiff submitted that by allowing the unabated use of dollars in Nigeria to the detriment of the naira, the defendant has failed in its statutory duties to ensure that naira remains the only recognised means of legal tender in Nigeria.
He noted that the Minister of Finance, Wale Edun, on August 17, 2021, publicly admitted that the multiple exchange rates system had compounded the problem in the Nigeria capital market and further stated that the defendant’s latest policy was directed towards a unified exchange rate.
Falana said, “The defendant, having realised that its policies on dual exchange rate system have caused more harm than good, declared the parallel market illegal and a bad determinant for the naira.
“The defendant further intimated its plan to eliminate the multiple exchange rate regime and unify the exchange rates and manage the rate in a sustainable manner over a period of 12 months but has failed to do so.
“The apparent remiss of the defendant which has impoverished and pauperised many Nigerians must not be further condoned and same ought to be expeditiously addressed in order to save the jittery value of our currency that was once ranked as one of the strongest currencies in the world.
“To this end, we humbly submit that by employing unsuitable mechanisms and creating multiple exchange rates in contravention of section 16 of the CBN Act, the defendant has categorically failed to carry out its principal objects which inter alia, are to ensure monetary and price stability…, and promote a sound financial system in Nigeria and we urge your lordship to so hold.
“Consequently, we urge your lordship to compel the defendant to put an end to the use of dollar as legal tender by enforcing policies and sanctions that will stop the illegal use of dollars as legal tender in Nigeria.”
The plaintiff, among other reliefs, sought” “A declaration that by virtue of section 16 of the Central Bank Act the legal tender in Nigeria is naira and kobo.
“A declaration that by the combined effect of sections 15 and 20(1) of the Central Bank Act, the currency notes issued by the defendant shall be the legal tender in Nigeria.
“A declaration that by virtue of section 16 of the Central Bank Act the exchange rate of the Naira shall be determined, from time to time, by a suitable mechanism devised by the defendant for that purpose.
“A declaration that by virtue of section 16 of the Central Bank Act the defendant is not competent to allow multiple exchange rates of the naira vis-a-vis the dollars and other foreign currencies.
“A declaration that by virtue of section 20(5) of the Central Bank Act the defendant is under a legal obligation to prosecute any person who refuses to accept the naira as a means of payment in Nigeria.”
He pleaded with the court to allow the suit to be served out of Lagos State and in the Federal Capital Territory, Abuja.