Human rights lawyer, Femi Falana, SAN, has dragged the Central Bank of Nigeria (CBN), before the Federal High Court in Lagos seeking for a declaration that the apex bank lacks constitutional power to float the naira.
Floating the naira refers to a currency exchange rate regime in which the value of the Nigerian naira is determined by market forces, specifically the supply and demand dynamics in the foreign exchange market.
Falana in an Originating Summons brought under the inherent jurisdiction of the Court is seeking for 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.
He is also praying for 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.
The Plaintiff is also asking for 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.
Specifically, Falana submitted the following issues for determination
“Whether by the combined effect of sections 15 and 20(1) of the Central Bank Act, the currency notes issued by the Defendant shall be legal tender in Nigeria?
“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?
“Whether by virtue of section 16 of the Central Bank Act the Defendant has the power to allow multiple exchange rates of the Naira vis a vis the Dollars and other foreign currencies?
“Whether 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?”
In a 12-paragraph affidavit deposed to by Ayodele Aribisala, a legal practitioner in the law firm of the Plaintiff, he stated
on June 14, when the naira was trading at a range of 730 to 755 against the dollar at the Investors and Exporters window, the CBN allegedly instructed Deposit Money Banks to allow the naira to float freely against international currencies. Currently, according to the CBN website, the exchange rate is listed as N744 to N746.
“That the Defendant asked Nigerians who receive dollars and other foreign currencies from abroad to collect Naira from local banks.
“That the Plaintiff reported the Defendant to the Economic and Financial Crimes Commission for allowing banks to cheat Nigerians who receive money from abroad.
“As the Defendant was unable to defend the action, it announced that remittances could be collected in dollars.
“That the Plaintiff wrote to the Defendant to furnish him with measures being put in place to end the dollarization of the Nigerian economy.
“The Defendant replied the letter but has refused to take any measures to correct the dollarization of the national economy.
“That the Defendant has allowed many landlords in Lagos, Abuja, Port Harcourt and other cities in the country for which the Defendant was established to serve to collect rents in dollars.
He stated that the Defendant has refused to stop the collection of school fees and rents in dollars in Nigeria.
That by virtue of the governing law of the Defendant, the currency notes and coins issued by the Defendant shall be legal tender in Nigeria at their face value for the payment of any amount and it is illegal to dollarize the economy of Nigeria in any manner whatsoever.
That the Defendant threatened to go after landlords, schools collecting payment in dollars but has failed to effectuate its threats.
That in 2015, one dollar was exchanged for ₦178 while in 2022 it has been exchanging for ₦750.
That the multiple exchange rate regime led to the emergence of difference 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.
That the multiple exchange rate system which the Defendant currently operates in Nigeria does not encourage investors and the divergence between the multiple rates is difficult to manage.
“That the Defendant in June 2020, maintained that the multiple exchange rates is not a good determinant for the value of naira and publicly declared its plan to unify the multiple exchange rates of dollars but has failed, neglected or refused to implement such plans. (Attached as Exhibit D is a copy of the newspaper publication showing the Defendant’s plan to eliminate the multiple exchange rate regime in the country).”
