Naira floating is illegal, says Falana

Human rights attorney Femi Falana, SAN, has criticised the Central Bank of Nigeria's decision to float the naira.

Falana also disclosed that he is contesting the decision to float the naira in court, citing its illegality.

On June 14, when the naira was trading between 730 and 755 per dollar at the Investors and Exporters window, the CBN allegedly instructed Deposit Money Banks to enable the naira to float freely against foreign currencies. According to the CBN website, the current exchange rate ranges from N744 to N746.

However, speaking on Friday's Sunrise Daily on Channels Television, Falana argued that the CBN Act requires the central bank to determine the exchange rate.

“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.

“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 said

According to Section 20(1) of the CBN Act, only currency notes issued by the Central Bank, specifically the naira, are recognised as legal tender in Nigeria.

 He added that Section 20(5) of the Act makes it a crime, punishable by six months in prison, for anyone to use another currency in Nigeria without the central bank's approval.

Our progress will be limited, according to Falana, unless government officials take measures to strengthen the naira and establish it as Nigeria's sole legal tender.

He also noted that the Federal Government's sanction of N5 billion in palliatives for each state and the FCT is a temporary measure intended to divert attention.

“They are temporary measures. Some of them are quite diversionary and the people in government have not addressed the root of the crisis, which is the dollarisation of the economy.

“Whatever palliatives that are announced will be eaten up by the dollarisation of the economy,” he said.