Falana Sues CBN, Seeks to Stop Liberalisation of Forex Market

25 Feb 2016

 Femi Falana

Lagos-based lawyer, Mr. Femi Falana, has dragged the Central Bank of Nigeria (CBN) to court over its liberalisation of the  forex market.
In the suit filed before the Federal High Court, Abuja, Falana asked the court to restrain the bank from allowing market forces to determine the exchange rate of the naira to dollar.

He also asked the court to stop the use of the United States dollar as a means of payment in the country.

Falana said the CBN has dollarised the economy to the extent the US dollar has become a legal tender as school fees, rents and others now being charged and paid in dollars to the detriment of the nation’s economy.

The CBN’s monetary policy, according to him, has led to a situation where too much naira was made to chase a few dollar with an attendant weaker naira and adverse multiplier effects such as rising inflation, closure of factories and increasing unemployment.

The senior advocate argued that while the CBN claimed it had fixed the exchange rate at N198 to a dollar, and President Muhammadu Buhari’s persistent vow never to devalue the naira, the apex bank “had allowed market forces to increase the exchange rate to over N400 to a dollar.”

In a supporting affidavit, Falana stated that “the devaluation of the currency and dollarisation of the economy have made mockery of the yet to be passed 2016 budget of the federal government.

“The monetary policy of the defendant (the CBN) 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.

“The monetary policy of the defendant has also led to increasing costs, rapidly rising inflation and interest rates, closure of factories and the attendant high level of unemployment.”

“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 Central Bank of Nigeria (Establishment) Act 2007 and section 16 of the 1999 Constitution as amended,” he contended.

Falana also wants the court to determine whether the CBN’s decision to allow the US dollar as legal tender for payment of any amount in Nigeria is not a contravention of Section 20 of the CBN Act.