Naira Redesign: Much ado about a monetary policy 

THE confusion over the expiry date as legal tender of the three naira notes of 1000, 500 and 200 being rested continued on Wednesday, February 8 when the Supreme Court stopped the Central Bank of Nigeria (CBN) from retaining its February 10 deadline for the use of the notes. 

There were reports on Wednesday night that the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, had promptly filed a suit before the Supreme Court opposing the judgment.

Malami is arguing that the Supreme Court lacked the jurisdiction to hear and pass judgment on the matter.

The CBN had announced last October that it would be redesigning the three notes with a view to mopping up unregulated money outside the banking vault, which it estimated to be 80 per cent.

The CBN governor, Godwin Emefiele, also said redesigning the naira would enable the Federal government tame terrorism and banditry, as well as curb vote-buying during the forthcoming general elections in February and March.

Emefiele said the new, redesigned notes would go into circulation on December 15, 2022, while the old notes being rested would cease as legal tender on January 31.

But scarcity of the redesigned notes and the attendant agonies experienced by the people to access them, coupled with pressure from the House of Representatives and some state governors, compelled the CBN to extend the deadline to February 10, despite Emefiele’s initial insistence that there would be no extension.

The CBN initially banned cash withdrawals in banking halls and encouraged the public to access cash through alternative payment platforms like the automated teller machines (ATMs) and point-of-sale centres. The CBN, Emefiele, said, was intent on implementing its
cashless policy.

Emefiele: in the eye of the storm over naira redesign

But even with the new date looming, there has been no succour, as the new notes remain as scarce as hen’s teeth. The situation had degenerated in the past few days, with protests in some states, and angry customers vandalising banks’ properties.

Three states controlled by the ruling All Progressives Congress (APC) – Kaduna, Kogi and Zamfara – had headed to the Supreme Court on February 3 praying for an order to stop the CBN from sticking to its February 10 deadline on the old notes. The applicants cited the
sufferings being experienced by the people as cause for their action.

In its judgment on Wednesday, a seven-man panel of the court led by John Okoro issued an order of interim injunction restraining the Federal government through the CBN or the commercial banks “from suspending or determining or ending on 10 February the time frame with which the now older version of the 200, 500 and 1000 denominations of the naira may no longer be legal tender pending the hearing and determination of their motion on notice” regarding the issue.

Legal controversies over ruling

The Supreme Court ruling itself has been generating further confusion. The apex court’s decision has seemingly overshadowed another order given by a Federal High Court in Abuja on February 7 to the CBN not to extend the February 10 deadline for the naira swap.

Four political parties- the Action Alliance, Action Peoples Movement, Action Peoples Party and National Rescue Movement – had approached the court seeking an injunction to ask President Muhammadu Buhari, the CBN and commercial banks not to extend the deadline.

In his ruling, Justice Eneojo Eneche, granted an order of interim injunction restraining the defendants from suspending, stopping, extending, varying or interfering “with the extant termination date of use of the old N200, N500 and N1000 bank notes being 10th day of February 2023 pending the hearing and determination of Motion on Notice.”

There have arisen arguments over the validity of the Supreme Court judgment, and whether the CBN could be bound by it. A post, the original writer yet unknown, was widely shared on facebook after the judgment, assuring whoever wishes to believe that the Supreme Court decision was a mere “academic exercise” that could not stand.

A former philosophy lecturer at the Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Akinyemi Onigbinde, urging readers on his facebook post on Wednesday to “play safe by abiding by CBN guideline”, and “legal tender old naira expires10/02/2023”, forwarded the shared post.

It partly read, “The deadline won’t change. Neither CBN nor commercial banks was joined as parties to this suit. The 3 state governments simply took advantage of the fact that in matters purely between the state and the Federal Government , the Supreme Court can serve as a court of first and only instance. Joining the CBN in the matter would immediately rob the Supreme Court of jurisdiction.

“The Attorney-General cannot issue a binding order on the CBN Governor. The CBN Act didn’t contemplate such and the interim order is simply an academic attempt at grandstanding. Only the CBN is empowered by law to determine what is termed legal tender.”

A Lagos lawyer, Benjamin Umudjoro, managing partner at Umudjoro and Co, disagreed. Umudjoro told The ICIR that the Supreme Court decision superseded all other verdicts on the matter since the Federal government, which controls the CBN, had been bound by it.

He added that the judgment would stand and only an order by the Supreme Court can vacate it. Reminding that the judgment is interim, the lawyer said it would be interesting what would happen next on the naira swap debacle on February 15 when the Motion on Notice begins before the Supreme Court.

A senior advocate, Mike Ozekhome, agreed with Umudjoro on the superiority of the Supreme Court on the matter, while quickly pointing out that the judgment was only temporary.

Ozekhome, speaking on Wednesday evening on a Channels TV live programme, ‘The 2023 Verdict’, said the High Court judgment restraining the CBN from extending the February 10 deadline would have stood if the Supreme Court had not issued a contrary order.

He added that lower courts can only “blow muted trumpets” when matters are being heard in the highest court.

But the Lead Director, Centre for Social Justice and lawyer, Eze Onyekpere, told The ICIR that the Supreme Court acted on the deposition of the three state governors without yet giving an opportunity to the Federal government and the CBN to respond.

Onyekpere says Supreme Court order could be vacated on February 15

Onyekpere noted, “That is why it is an interim injunction stopping the CBN and the Federal Government from stopping the legal tender status of N200, N500 and N1000 on February 10. The case was, however, readjourned till February 15, which is a return date when all the parties would have been served, and the lawyers would have joined issues and take it up from there.

“This is an interim order, which stands until February 15, and could possibly be vacated if the CBN and others joined in the suit would show cause for such.

“For now, the implication is that those currencies which would have been supposed to have been legal tender by February 10 would still be legal tender unless the court directs otherwise after February 15.”

A people divided

The CBN’s naira swap move has torn the citizens apart, barely three weeks to the presidential election. The APC had been calling for the extension of the deadline. Its presidential candidate, Ahmed Bola Tinubu, had alleged political undertones to the policy, saying it was introduced to stop him from winning the presidential election.

Tinubu has already lauded the Supreme Court judgment. In a statement issued on Wednesday on his behalf by the APC Presidential Campaign Council Director of Media and Publicity, Bayo Onanuga, Tinubu said, “Our country was dangerously careering toward anarchy and economic shutdown. But with the Supreme Court interim ruling, our country has been pulled back from the precipice.”

On the contrary, the Peoples Democratic Party (PDP) and the Labour Party (LP) the two major contenders against the APC in the presidential election, supported the CBN’s insistence on not extending it.

In a statement on February 1, the PDP presidential candidate, Atiku Abubakar, urged the CBN not to extend the February 10 deadline, saying the initial purpose and initiative of redesigning the currency would be destroyed.

“The CBN and the Presidency should be steadfast. The merits of the new naira policy far outweigh the little inconvenience we are experiencing.

“This is one policy that will benefit the country in the long term. We should not allow those selfish, parochial people with narrow vision to derail it,” he stated.

While many Nigerians, hit hard by the cash crunch that the naira swap had caused, rejoiced at the Supreme Court ruling that would enable them more time to access cash, some others stormed the CBN headquarters and the office of the Attorney-General of the Federation to protest against it.

In his Twitter reaction, a former Aviation minister and chieftain of the APC, Femi Fani-Kayode, expressed his thanks to the Supreme Court for “displaying remarkable insight and sensitivity” on the matter.

Fani-Kayode tweeted, “At least, now we have a chance to change the narrative and take away the immense suffering that has been imposed on our people over the last few days.”

A civil servant in Lagos, Biodun Famakinwa, was joyous of the judgment, saying he had been unable to access cash from the bank his account is domiciled at, and from ATMs.

Famakinwa said he and his family had been surviving on shylock withdrawals from PoS operators.

“At least, now there is hope there will be improvement in cash withdrawals at ATMs and banks in the next few days. Let’s see what the CBN will say on February 15. That February 10 deadline was so scary,” he said.

A spokesman of the PDP, Dino Melaye, tweeted his support for the CBN. Melaye berated governors of the three states that dragged the Federal government to court on the matter for doing so in the first place.

The World Bank and the International Monetary Fund (IMF) also weighed in on the issue in favour of extending the deadline. In a statement on Wednesday by the IMF Resident Representative to Nigeria, Ari Aisen, the body urged, “In the light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the bank
note swap process, the IMF encourages the CBN to consider extending the deadline should problems persist in the next few days leading up to the February 10, 2023 deadline.”

Agonies, hunger, anger as scarcity persists

So much drama has trailed the introduction of the new notes as their scarcity persists and the people struggle to obtain them. The CBN disclosed it had been able to suck in about N2.7 trillion in its effort to mop up the N3 trillion cash outside the banking hall.

But according to critics like the Governor of Kaduna State, Nasr El-Rufai, the apex bank had not pumped enough of the new notes into circulation to ensure that supply meets public demand. El-Rufai gave a figure of about only N300 billion of the new notes that the CBN had released.

The result has been chaos. Dramas, from the preposterous to the comic, have been playing out in banking halls, and at ATMs and point-of-sale centres. People requiring cash have been crowding ATMs daily to seek for cash. But many of the machines have been empty. In the best instance, by today, where cash is available, people can only withdraw a maximum of N20,000, and that has to be for cards issued by the owner-banks. Other cards can only get a maximum of N5,000. The banks claimed they are cash-strapped, so much so they are discriminating in payments both at their ATMs and over the counter.

Chaos at the Union Bank ATM in Kubwa, FCT.

“What, for God’s sake, can N5,000 take care of in my family of five?”
an automobile mechanic, Habeeb Oyawale, complained on Tuesday at the Stanbic IBTC ATM on Market Street, Somolu, Lagos State.

Two weeks ago when the situation was grave, a woman who had come into the same Stanbic Bank branch at Somolu seeking to withdraw N20,000 was told she could get only N1,000, and in N5 denomination. The denomination had virtually gone into extinction, but the raging naira swap crisis seems to be enabling the CBN an opportunity to push it out into circulation.

Some banks have also hidden under the current scarcity to be dispensing mutilated notes.The ICIR checks in Abuja showed most commercial banks in the Federal Capital Territory  dispensing mutilated notes of the N50 denomination, claiming they had run out of stock of the new notes.

“I could not get the new cash. The banks for days now have been issuing us older and mutilated N50,” a PoS merchant in Dei-Dei, Abuja, Musiliu Ahmed, told The ICIR.

Ahmed displaying the mutilated currency he got from a commercial bank

Many banks have even shut their banking halls against customers, as protesters started taking to the streets and destroying banking facilities. In Ogun State, videos of protesters stoning a GTBank branch in Abeokuta went viral on Monday February 6. And there were confirmed reports that the police shot dead one protester in the state on Tuesday.

Another video this week showed workers of another bank scaling a fence to escape the wrath of protesting workers.

Yet, there were too other videos showing, one a woman half-nude in a banking hall shouting at the top of her voice she wanted to close her account since she was unable to get cash to feed her family, and another one of a man unabashedly in his birthday suit also in a banking hall declaring he was not leaving the scene until he was given cash.

PoS operators have been doing brisk business exploiting the situation, with a ready excuse that they are also finding it difficult to access cash with which they do their transactions. They have upped their commission of only N200 on a withdrawal of N10,000 to N1,000 on every withdrawal of N5,000.

INEC raises concern on election

The Independent National Electoral Commission (INEC) has expressed a
fear that the raging scarcity of cash could disrupt the 2023 elections. On Tuesday, February 7, the INEC chairman, Mahmood Yakubu, met with the CBN governor to tell him that many service providers to INEC had no bank accounts and needed to be paid fully in cash.

“The Nigerian election is a huge and complex one. It requires the
engagement of critical services, and in line with the provisions of the exchange laws and regulations, service providers are generally paid by means of electronic transfer to their accounts.

“However, there are crucial areas such as transportation and human support services that have to be immediately enumerated, either partially or in full because services are rendered,” Yakubu told Emefiele.

    The CBN governor has, however, assured the INEC boss that enough cash would be available to the body to ensure a hitch-free election.

    The Institute of Chartered Accountants of Nigeria (ICAN) has appealed for calm on the crisis.

    In a statement issued on February 8 titled, ‘Call for Calm’ and signed by the association’s president, Tijjani Isa, ICAN urged the CBN and other key stakeholders to see the interim suspension of the deadline as an opportunity to rapidly improve the supply and distribution of the new naira notes (alongside the old notes), stabilise the alternative financial payment solutions, and expand public awareness on the indisputable benefits of a cashless economy.

    ICAN believed that these actions would gradually restore public trust in the country’s presently challenged financial system and calm all frayed nerves.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

    Join the ICIR WhatsApp channel for in-depth reports on the economy, politics and governance, and investigative reports.

    Support the ICIR

    We invite you to support us to continue the work we do.

    Your support will strengthen journalism in Nigeria and help sustain our democracy.

    If you or someone you know has a lead, tip or personal experience about this report, our WhatsApp line is open and confidential for a conversation



    Please enter your comment!
    Please enter your name here

    Support the ICIR

    We need your support to produce excellent journalism at all times.

    - Advertisement