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N5000 Note: BAR Association vows to challenge CBN

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Barely eight months after the nation was brought to a standstill by the popular will of the people to stop total removal of fuel subsidy, the intended introduction of a new currency profile, particularly the N5000 note, has once again pitched possibly over 99

per cent of Nigerians against the Central Bank's proposal.   Indeed, if a plebiscite is conducted on this matter, it is likely that only Governor Sanusi and core officials of the CBN and Federal Executive will stand on the side of the new currency profile.   Yet, Lamido Sanusi's apparent obstinacy on this matter appears founded on the purported autonomy the apex bank enjoys under the 2007 CBN Act!  

Instructively, the Nigerian Bar Association (NBA), who may be appropriately described as the powerhouse of the judicial system, has also condemned the intended currency changes.   In a communiqué issued at its recently concluded annual general meeting, the NBA maintained that the introduction of the new legal tender will adversely affect the economy, and described the proposal as 'shallow and poorly thought out'.   The NBA further held that the new policy has the potential of devaluing the naira as well as diminishing our quality of life.   The learned gentlemen also observed that the proposal will 'push corruption and money laundering to new unimaginable high'.

Consequently, NBA resolved that 'if the CBN succeeds in its reckless plans to negatively alter the fate of the Nigerian economy, it will go to court to seek redress, as the proposal is not a fiscal measure for which CBN could claim exclusive jurisdiction over'.   In other words, 'it is a legislative matter with ramification on the lives of all Nigerians, and this matter is actually within the sole legislative province of the National Assembly'.   For good measure, the Lawyers noted that 'the CBN is not the fourth arm of government, but an executive body', and consequently, advised Sanusi to 'submit the measure for legislative approval'!

The Bar Association, indeed, often lends support to what it considers as popular will, but rarely does it ever come out as a body, as it has done in this case, to threaten to directly take court action against any government policy.   Their current intervention could well be the recognition of the serious damage that CBN's macabre monetary policy management could unleash on our economy and the social welfare of our people.

Incidentally, NBA's current opposition may be perceived as insincere, if it can be shown, for example, that it failed in the past to stand up against more serious challenges to our constitution and economy and the social welfare of our people.    

The concern of discerning critics on this matter is that even if the apex body is altruistically concerned about the parlous state of our economy and support for the rule of law, it may have inadvertently chosen to lend its weight against the sustenance of a festering symptom rather than consciously addressing the root cause of that symptom!   In other words, treatment of a cause should be more important than its symptoms.   Consequently, the NBA will fail in its quest to redeem our economy and improve the social welfare of our people, as it altruistically expects, if it directs its considerable legal arsenal against the perpetration of the symptoms of a bad government policy rather than attacking the root cause of the multifaceted symptoms.

I have ceaselessly argued and maintained in several articles in this column and elsewhere that the issue of higher and higher denomination currency notes and its alternative, redenomination, are really symptoms of failed monetary policy management.   I have similarly insisted that CBN's oppressive and unbelievably high Monetary Policy Rate of 12 per cent and the inability of the real sector to access funds at single digit interest rates, our annual double-digit inflation rate, an ever-weakening naira in spite of rapidly increasing reserves, constantly rising fuel prices and attendant trillions of naira fuel subsidies, increasing debt accumulation and the attendant atrocious average interest rate of over 15 per cent on government risk-free borrowings, rising rate of unemployment, increasing rate of corruption fuelled by the ever-present burden of excess liquidity in the system are all, in fact, symptoms caused by a singularly potent virus.    This economically and socially destructive virus is, without a doubt, CBN's monopoly of the foreign exchange market!

I recall that some years back, our considered exposition on this issue was sent to the President of the Bar Association in a paper presented to the National Economic Intelligence Committee in 2002, titled 'Liberalisation of the Foreign Exchange Market: a proposal for the liberalisation of the forex market in Nigeria and its economic benefits' - Boyo/Ojomaikre.   In truth, we got an acknowledgement and commendation of our efforts in a letter dated 11th July 2003 from the incumbent NBA President.   Regrettably, however, the promised invitation for in-depth discussion is yet to materialise nine years after.

It is possible, of course, that the NBA executive may not have noticed that CBN's capture of constitutionally earned dollar revenue and its monthly substitution with naira allocations is actually against provisions in Section 162 of the Constitution.   There is truly nothing in that provision that gives CBN the right to unilaterally determine the exchange rate of the naira, or indeed, permits it to continuously create an enabling environment for corruption when it embarks on printing/creating naira values for distributable dollar revenue every month.   Curiously, the apex bank ultimately turns round to auction the same dollars to third parties for onward sales to agencies of government, who need to pay for their imports; a system akin in many respects to round tripping!  

Consequently, CBN's action is not only patently illegal and unconstitutional, but its monopoly of the foreign exchange market is actually the poison that has deepened the poverty of our people even in times of considerable export revenue, and will inevitably make Sanusi's new N5000 note or redenomination ultimately expedient!   Ravaging inflation and higher denomination notes are all symptoms of this malaise.  

Fortunately, the Bar Association does not have to reinvent the 'wheels' on this matter, as the respected legal activist, Mr. Femi Falana, has instituted a case on our behalf against the CBN for willfully violating the constitutional provisions with regards to disbursements from the consolidated revenue fund.

The current NBA executive will be perceived as truly altruistic and it will make eminent sense if it joins forces and supports the existing action against CBN's conscious and unconstitutional destabilization of our economy.