The House of Representatives has urged the Central Bank of Nigeria, CBN, to investigate the use of dollars for domestic transactions.
The lawmakers said during plenary on Tuesday, that the use of the American greenback for the payment of school fees, airline fares, house rent, and other purposes, is putting pressure on the naira.
The lawmakers made the suggestion is coming after the respected senior Advocate of Nigeria, SAN, Femi Falana dragged the CBN to court over its failure to stop the dollarization of the economy.
In the suit marked FHC/L/CS/476/23, filed before a Federal High Court in Lagos, the senior advocate said the abdication of duty by the CBN to enforce its powers under Section 2 of CBN Act has affected the economy negatively.
The Nigerian currency, now exchanged for more than N1000 to the US dollar has been consistently devalued against other foreign currencies. The problem became even worse after the CBN adopted the convergence of the exchange rates in June this year.
According to the apex bank, the step was necessary to improve forex supply, enhance customer confidence, discourage speculation, and ensure the overall stability of the forex market.
Apparently, the expected gains have been far-fetched, raising serious questions among not a few Nigerians on what should be done next to arrest a situation where the naira will further lose its value against other foreign currencies.
Speaking on the issues yesterday, the lawmakers cited speculative activities in the forex market as a major problem putting pressure on the naira. The reps also urged the CBN to increase the withdrawal limit of the naira to reduce the pressure on the dollar and other foreign currencies.
One of the lawmakers, Ademorin Kuye wondered why “Today, flights by foreign airlines are charged in dollars. In real estate businesses across the country, they are charging in dollars. This is criminal. Some private schools are collecting fees in dollar. This must be looked into.”
Instructively, the lawmakers passed a resolution on the CBN to engage with stakeholders on how to stabilize the naira, following a motion moved by Ismaila Haruna Dabo.
The House also mandated its Committees on Banking Regulations and National Security and Intelligence to interface to investigate the use of the US dollar as legal tender for domestic transactions.
Falana in his suit urged the court to determine “Whether by virtue of Section 16 of the Central Bank Act the exchange rate of the naira shall be determined, from time to time, by a suitable mechanism devised by the Bank for that purpose?
He claimed that ‘the seeming non-performance of the defendant’s statutory obligations culminated in dollarisation of the country’s economy which has in turn affected the country’s economy negatively contrary to the objectives of the defendant as enshrined in Section 2 of CBN Act.’
In a 10-paragraph affidavit in support of the Originating Summons deposed to by one Mr. Ayodele Aribisala, the plaintiff averred that the defendant had allowed many landlords in Lagos, Abuja, Port Harcourt and other cities in the country for which the defendant was established to serve to collect rents in dollars. He added that: “The Defendant has refused to stop the collection of school fees and rents in dollars in Nigeria.”
According to Falana, the dollarisation of the Nigerian economy and the failure to address the multiple exchange rates further pushed the naira to its current fluctuating state.
“That the failure of the defendant to perform its statutory duties has resulted in the constant devaluation, depreciation and unending plunge of the naira.
“That the resultant effect of the abdication of defendant’s statutory duties has also affected the country’s economy and many businesses adversely,” he said.
The suit dated March 16, has the CBN as the sole defendant.
