In an address which I delivered last Saturday (March 21, 2015) at the Life Theological Seminary, Ikorodu, Lagos State I criticized the increasing dollarization of the Nigerian economy by the management of the Central Bank of Nigeria.
In pointing out the illegality of turning the United States Dollar into the official medium of exchange in Nigeria I did say inter alia: “Under Section 16 of the Central Bank Act, 2007 the power to fix and determine the exchange rate of the Naira is exclusively vested in the central bank. But the CBN has abdicated that statutory duty to the so called market forces.
For instance, the Monetary Committee of the CBN fixed devalued the national currency in November last year by fixing the exchange rate at N168 to a dollar. But market forces have increased the exchange rate to over N220 to a dollar while the International Monetary Fund is insisting that the Naira be further devalued. In justifying the reckless devaluation of the Naira last November, Mr. Godwin Emefiele, the Governor of the Central Bank of Nigeria blamed it on the falling price of oil in the international market. However, the CBN governor has asked Nigerians to accept that devaluation would come with pains but would lead to benefits in the long run.
This is a reminder of the mantra of the discredited Ibrahim Babangida junta when it accepted the prescription of the International Monetary Fund to devalue the Naira under the dubious Structural Adjustment Program in 1986. Although Mr. Emefiele did not explain why some other oil producing countries have not devalued their currencies he as publicly admitted that the factors causing the continued fall in the value of the Naira are beyond the control of the Central Bank and the Federal Government. Contrary to official claim on cause of the devaluation of the Naira the policy was largely induced by the illegal dollarization of the neo-colonial capitalist economy of the country. In utter violation of the Central Bank Act rents are fixed and collected in dollars in the high brow areas of Lagos, Abuja, Port Harcourt and other cities in Nigeria.
Some institutions charge tuition fees in dollars. On a daily basis, traders are allowed to buy millions of dollars to pay for all manners of goods including toothpicks imported from China, United Arab Emirates, Turkey etc. No doubt, the pressure on the dollar has recently increased due to unprecedented demand from politicians in preparations for the 2015 General Election. Hundreds of millions of dollars were bought from the forex market to purchase votes during the congresses and primaries of political parties.
A particular candidate has been linked with the distribution of dollars to traditional leaders and other influential groups in the country in a desperate bid to win the presidential election. In a bid to dollarize the economy and destroys the Nigerian economy the CBN supplies millions of dollars to the foreign exchange market on a weekly basis. Although Nigeria has become the largest importer of the United States dollars in the world neither the International Monetary Fund (IMF) nor the World Bank has ever questioned the reckless devaluation of the economy. Even, the National Assembly which is debating the 2015 Appropriation Bill has not deemed it to consider the deleterious effects of the increasing devaluation of the national currency on the implementation of the Budget.
Since by virtue of section 16 of the Central Bank Act, 2007 the currency notes and coins issued by the central bank shall be legal tender in Nigeria at their face value for the payment of any amount it is illegal to dollarize the economy in any manner whatsoever. Indeed, under section 20 (5) of the Act any person who refuses to accept the Naira as a means of payment for any amount in Nigeria is guilty of an offense and liable to be prosecuted and if found guilty shall be fined N50,000 or 6 months imprisonment. In Chief Gani Fawehinmi v. President, Federal Republic of Nigeria (2007) 14 NWLR (Pt 1054) 275 the plaintiff challenged the policy of In the Olusegun Obasanjo Administration of paying dollar salaries and allowances to Dr. Mrs. Ngozi Okonjo-Iweala and Ambassador Olu Adeniji, the ministers of Finance and Foreign Affairs respectively.
The federal high court struck out the case for want of locus standi on the part of the plaintiff. But the Court of Appeal disagreed with the lower court. In upholding the locus standi of the appellant to maintain the action the Court held the payment of salaries of any public officer in dollars was contrary to the provisions of the Certain Political, Public and Judicial Office Holders (Salaries and Allowances etc) Act No 6 of 2002.
In declaring such payment illegal and unconstitutional the Court directed both ministers to refund to the Federal Government the money paid to them in excess of the salaries and allowances approved by law. Based on the decision of the Court of Appeal and the relevant provisions of the Central Bank Act the management of the CBN should stop the further dollarization of the economy. “
In his reaction to the aforesaid observations the CBN Governor, Mr. Emefiele addressed a press conference at Abuja last Monday wherein he belatedly advised schools, landlords and other business enterprises against demanding foreign currencies for the settlement of transactions carried out within the country. Curiously, the Governor was silent on the weekly sale of millions of dollars to politicians.
He however reiterated that the official currency of the country remained the naira and that the CBN would “in due course” come after those who are involved in the illegal practice. By condoning the grave violations of the provisions of the CBN Act since November last year, the management of the Bank had deliberately sanctioned the illegality and thereby contributed to the deterioration of the value of the national currency. With respect, Mr. Emefiele should not be allowed to play on the intelligence of the Nigerian people.
The law does not expect the CBN Management to embark on issuing cautionary statements but to ensure the arrest and prosecution of the people involved in the criminal enterprise of dollarizing the economy. If the CBN is not prepared to discharge its duty by stopping the further dollarization of the economy we shall not hesitate to pray the Federal High Court to order the prosecution of the management of the Bank for criminal negligence in the circumstance.