Human rights lawyer Femi Falana has revealed that the Central Bank of Nigeria (CBN) is facing a lawsuit over its decision to float the Naira currency.
Falana shared this information during an interview on Channels Television on Friday.
In June, the CBN reportedly instructed Deposit Money Banks to allow the Naira to freely float against the dollar and other international currencies.
This decision came at a time when the Naira was trading at around 730 to 755 against the dollar at the Investors and Exporters (I&E) window.
Falana criticized the CBN’s move to float the Naira, labelling it as “illegal.” He mentioned that the decision is currently being challenged in court.
He said,
“There’s no provision for floating the naira. It’s illegal. You say, ‘The value of the naira will be determined by market forces.’ That is not there in the law,” he said.
“I’ve had to sue the Central Bank of Nigeria at the Federal High Court because Section 16 of the Central Bank Act has imposed a duty on the Central Bank to fix and determine the rate of the naira vis-a-vis other currency,” he added.
As of Friday, the CBN puts the exchange rate between N744 and N746.
Falana said the CBN Act made it compulsory for the apex bank to fix the exchange rate.
He noted that Section 20(1) of the CBN Act provides that the only legal tender in Nigeria shall be the currency notes issued by the Central Bank: “only the naira.”
Section 20 (5) of the Act also provides that anybody who spends any other currency in Nigeria without the approval of the central bank has committed an offence “and shall be prosecuted”, he explained, adding, “The penalty is six months’ imprisonment.”
Falana further emphasized that unless government officials take substantial steps to strengthen the Naira and establish it as the sole legal tender in Nigeria, the country’s progress will be limited.
Regarding the Federal Government’s decision to allocate N5 billion to each state and the Federal Capital Territory (FCT) for the purchase of food items to distribute to the less fortunate, Falana dismissed these measures as temporary and diversionary.
He stated that these palliative actions fail to address the fundamental issue, which is the dollarization of the Nigerian economy.
Falana argued that any relief efforts announced will ultimately be offset by the prevailing dollarization trend in the economy.