Following the collapse in global oil prices, the value of the naira has plummeted as the scarcity of foreign exchange has hurt currency flows badly. Given the scarcity of US dollars, the CBN has restricted the sale of foreign currency to commercial banks, prompting calls for a devaluation of the naira as a way out of the crisis.
Opposing these calls for a devaluation of the naira, Mr Falana has asked the court to direct the CBN to stop using the dollar as legal tender in Nigeria. In the suit filed on his behalf by a lawyer in his firm, Wisdom Elum, Mr Falana alleges that the CBN had so dollarised the economy that the foreign currency had become a legal tender, with school fees as well as rents now being charged and paid in dollars to the detriment of the economy.
In the suit, the CBN is the sole defendant, who Mr Falana alleged has created a situation where too much naira was made to chase a few dollars with an attendant weaker naira and adverse multiplier effects such as rising inflation, the closure of factories and high levels of unemployment. He contended that while the CBN had fixed the exchange rate at N198 to a dollar and President Muhammadu Buhari had continued to restate his promise not to devalue the naira, the CBN had allowed market forces to increase the exchange rate to over N400 to a dollar.
A supporting affidavit deposed to by another lawyer in Mr Falana’s law firm Femi Adedeji, said: “The devaluation of the currency and dollarisation of the economy have made a mockery of the yet-to-be-passed 2016 budget of the federal government. The monetary policy of the defendant has led to a situation whereby too much naira chase few dollars, thereby making the naira weaker in relation to the dollar and instigating an adverse multiplier effect.
He asked the court to determine, whether the monetary policy of the defendant, which allows market forces to fix and determine the exchange rate of the naira is not a violation of Section 16 of the CBN (Establishment) Act 2007 and Section 16 of the Constitution of the Federal Republic of Nigeria, 1999 as amended. Furthermore the suit is asking the court to determine whether the CBN decision to allow the US dollar as a legal tender for payment of any amount in Nigeria was not a contravention of Section 20 of the CBN Act.
Mr Falana, a former chairman of the West African Bar Council, is also seeking an order directing the defendant to stop forthwith the use of the US dollar as legal tender in Nigeria in any manner whatsoever and howsoever. His suite is yet to be assigned to a judge and a hearing date is yet to be fixed.
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