The Supreme Court on Wednesday restrained the Federal Government from implementing the Friday deadline for the currency swap.
A seven-man panel of the apex court led by Justice John Okoro, in a unanimous ruling, granted an interim injunction restraining the Federal Government, the Central Bank of Nigeria and commercial banks from implementing the Friday terminal date for the old naira notes.
Also on Wednesday, the International Monetary Fund and the World Bank urged the CBN to extend the time limit.
The IMF and the World Bank stated that the short timeframe for the currency was causing hardships in the country.
Delivering the ruling in the application filed by the governors of Kaduna, Kogi and Zamfara States, Okoro granted the relief as prayed.
He stated, “An order of interim injunction restraining the Federal Government through the Central Bank of Nigeria or the commercial banks from suspending or determining or ending on February 10, 2023, the time frame with which the now older version of the 200, 500 and 1,000 denomination of the naira may no longer be legal tender pending the hearing and determination of their motion on notice for interlocutory injunction.”
The court further held that the FG, the CBN and commercial banks must not continue with the deadline pending the determination of a notice in respect of the issue on February 15.
Recall that three northern states had in a motion ex parte filed on February 3, urged the apex court to halt the CBN naira redesign policy.
Moving the application on Wednesday, counsel to the applicants, Mr Adul-Hakeem Mustapha, SAN, argued that the policy had led to an “excruciating situation that is almost leading to anarchy in the land.”
He urged the apex court to grant the application in the interest of justice and the welfare of Nigerians.
He referenced the CBN statistics which put the number of people without bank accounts at over 60 per cent.
Mustapha lamented that the few Nigerians with bank accounts had not been able to access their money as a result of the policy.
The senior lawyer further averred that unless the Supreme Court intervened, the situation would lead to anarchy because most banks were already closing operations.
Justice Okoro adjourned till February 15 for a hearing of the substantive suit.
But in its statement on Wednesday, the IMF resident representative in Nigeria, Ari Aisen, observed the challenges facing the currency swap initiative and called for a different approach.
He said, “In light of hardships caused by disruptions to trade and payments due to the shortage of new banknotes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote 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.”
IMF advises CBN
In a separate statement after an official staff visit to Nigeria by the IMF, the multilateral organisation equally asked the CBN to continue tightening its monetary policy.
The statement read, “Looking ahead, directors recommended decisive fiscal and monetary tightening to secure macroeconomic stability, combined with structural reforms to improve governance, strengthen the agricultural sector, and boost inclusive sustainable growth.”
It added, “Directors urged decisive and effective monetary policy tightening to avoid a de-anchoring of inflation expectations.
‘’Noting recent increases in the policy rate, they encouraged the Central Bank of Nigeria to stand ready to further increase the policy rate if needed, and to implement additional actions, including fully sterilising central bank financing of fiscal deficits and phasing out credit intervention programs. Strengthening the CBN’s independence and establishing price stability as its primary objective is critical.”
The IMF also encouraged the Nigerian government to remove the fuel subsidy by June and increase well-targeted social spending, alongside boosting revenue mobilization.
The global institution also urged the Nigerian government to finalise securitization of the CBN’s Ways and Means Advances, while emphasizing that the bank’s budget financing should strictly adhere to the statutory limits.
It called for a continued move toward a unified and market-clearing exchange rate by dismantling various exchange rate windows at the CBN.
On its part, the World Bank Nigeria said though it was normal to have periodic currency redesigns and demonetisation, such a transition usually takes about one year or more.
In an email response to our correspondent’s enquiry on Wednesday, the World Bank’s Senior External Affairs Officer for Nigeria, Mansir Nasir, noted that the bank was concerned about the short transition period announced by the CBN.
The email response read, “Periodic currency redesigns and demonetization of older notes are normal internationally. However, they usually involve transition periods of one year or longer so as to minimize economic disruption.
“After the Central Bank of Nigeria announced the naira redesign on October 26, 2022, with a short implementation timeframe through January 31, 2023 (now extended for a short additional period until February 10, 2023), the World Bank expressed concern about the timing and short transition period (see Nigeria Development Update, December 2022).”
W’Bank on effects
The World Bank further noted that rapid demonetisation could be costly to small businesses and poor and vulnerable households.
It added that it was highly unlikely that digital payments would increase fast enough to cover up for the shortage of new notes.
“This concern is based on international experience which suggests that rapid demonetizations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, including in rural areas, being particularly affected as they are liquidity-constrained and rely heavily on day-to-day cash transactions.
“It is highly unlikely that digital payments can increase quickly enough to compensate for the shortage of new notes; according to the latest available data (from before this policy), only 45 per cent of Nigerian adults had a bank account, 34 per cent reported paying or receiving money digitally over the past year, and only 9 per cent made an in-store payment by digital means.
‘’Digitisation is a structural challenge that will take time and require a systematic approach, especially to address inclusion challenges,’’ it affirmed.
The Bretton Woods institution further explained that households and firms already faced elevated financial pressures from prolonged high inflation recently compounded by external food and fuel price shocks and the phasing out of existing naira notes over a short time period may add to their challenges.
“In view of the apparent ongoing scarcity of new notes and the potential adverse economic and social impacts should the shortage of cash persist, the World Bank remains concerned about the short timeframe and would encourage the authorities to consider allowing a longer period for the redesign,” it added.
Meanwhile, the President, Major General Muhammadu Buhari (retd.), met with the CBN Governor, Godwin Emefiele, at the State House, Abuja, on Wednesday.
The meeting which happened shortly after this week’s Federal Executive Council meeting came hours after the Supreme Court restrained the FG from implementing the February 10 deadline for the currency swap initiative.
Emefiele did not speak with journalists after the meeting.
This happened as the 36 state governors in Nigeria asked the President to extend the deadline for the implementation of the naira swap policy.
The governors under the Nigeria Governors’ Forum made the demand in a letter to Buhari dated February 6, 2023, signed by the NGF Chairman, Governor Aminu Tambuwal of Sokoto State.
They also urged the President to revisit the cashless policy of the CBN.
The apex bank had last year pegged weekly cash withdrawal limits set for individuals and corporate organisations to N500,000 and N5 million, respectively.
The CBN said the aim was to boost the cashless policy and reduce the amount of cash outside the banking system.
FG challenges suit
While the IMF and World Bank backed the call for the extension of the deadline, the Attorney-General of the Federation, Abubakar Malami, on Wednesday asked the apex court to dismiss the suit filed by three northern state governments challenging the Friday deadline set by the CBN to end the legal tender status of the old naira notes.
The Federal Government argued that the Supreme Court lacks jurisdiction to entertain the suit in a preliminary objection filed by the AGF through his lawyers, Mahmud Magaji and Tijanni Gazali.
Consequently, the FG is asking the apex court to strike out the suit for lack of jurisdiction.
In court filings dated Wednesday, the AGF contends that “the plaintiffs have equally not shown reasonable cause of action against the defendant.”
On February 3, the state governments of Kaduna, Kogi and Zamfara, had sued the Federal Government over the naira redesign policy of the CBN.
The states urged the Supreme Court to compel the President Major General Muhammadu Buhari (retd.), the CBN and commercial banks to rescind the February 10 deadline for the old N200, N500 and N1000 banknotes as Nigeria’s legal tender.
NGF writes Buhari
In the letter to Buhari, the NGF said while the policy was intended to address the contradictions in the fiscal environment, poor execution of it would “hurt the economy and have a disproportionate impact on the most vulnerable.”
The NGF explained that state-by-state analysis of the policy had shown that the CBN policy would affect “several intra-state security arrangements which basically depend on cash transactions to ensure effective implementation”.
The letter noted, “Even though the identified constraints are to be found in almost every state in the country, they are particularly evident in states like Borno in the North-East and Bayelsa in the South-South where one finds a pitiable number of banks located only in the state capital which would basically render the workability of the new policies impossible for now.”
In a related development, a lawmaker, Senator Opeyemi Bamidele has declared the CBN as a threat to the general election through its badly implemented naira redesign policy.
He said this at a one-day special hearing on ‘The Extent of Implementation Of The Electoral Act, 2022 Ahead of The Conduct of The 2023 General Election,’ held at the National Assembly complex in Abuja, on Wednesday.
Bamidele (APC Ekiti Central), contended that the cash withdrawal guarantee the Independent National Electoral Commission obtained from the CBN on Tuesday was not certain as far as the smooth conduct of the In her submission, INEC National Commissioner, May Agbamuche, who represented the commission’s chairman, Prof. Mahmood Yakubu, stated violence could affect the credibility of the elections, especially if the attacks were targeted at INEC facilities.
The Executive Director of Yiaga Africa, Mr Samson Itodo, urged the INEC to reconsider its stand on the 3 million students who could be disenfranchised in the poll.
Itodo in his submissions at the public hearing, canvassed that tertiary institutions which had slated their examinations for the period of the election cancel the arrangement.
In his remarks, the Chairman of the Senate Committee on the INEC, Senator Kabiru Gaya, appealed to the INEC management and the authorities of the affected institutions to respect the rights of the students by cancelling any examination slated for the election period.
Lauding the Supreme Court ruling, the flag bearer of the All Progressives Congress, Bola Tinubu, saluted the state governors for defending the masses against the CBN policy.
This was disclosed in a statement issued in Abuja on Wednesday by the Director of Media and Publicity for APC Presidential Campaign Council, Bayo Onanuga.
Tinubu noted that the APC governors who instituted the suit acted well on behalf of the hapless Nigerian masses who were bearing the brunt of the naira redesign policy.
Also, the Kaduna State Government welcomed the Supreme Court decision extending the use of the old naira notes beyond February 10.
A statement by Governor Nasir El-Rufai’s Special Adviser on Media and Communication, Muyiwa Adekeye on Wednesday, thanked “the justices for their decision and appeals to the federal authorities to treat the ruling as an opportunity to relieve human suffering.’’
But a coalition of civil society groups under the aegis of the Civil Society Central Coordinating Council Wednesday protested against the Supreme Court order.
The National Coordinator of the CSCCC, Obed Okwukwe, who stated this at a news conference in Abuja, said their rejection of the order was because it was an attack on credible elections.
However, the Coalition of Northern Groups commended the Supreme Court ruling and called on the FG and the CBN to respect it.
The CSOs also took their protest with over 3000 followers, including men, women and youths to the Headquarters of the CBN where they dropped a letter for its Governor.
The group in a statement by its Spokesperson, Abdul-Azeez Suleiman, praised the state governors for standing on the side of the people.
Despite the temporary reprieve granted by the Supreme Court ruling, Nigerians were still finding it difficult to obtain cash from banks and ATM facilities.
In Ogun State, banks did not open because of fear of attacks.
On Wednesday, residents of the Federal Capital Nigerians besieged the ATMs in hotels and shopping to withdraw cash.
Scores of angry customers were seen at Transcorp Hilton, Fraser Suites, Silverbird Entertainment Centre and Jabi Lake Mall, among others.
The crowd at the Transcorp hotel became so much that security operatives and bank officials at the hotel had to give out tallies to those on the lines.
The queues obstructed movement in the lobby where the ATMs were situated, prompting the security guards to direct some persons to wait outside the lobby.
This infuriated some individuals as they condemned the cash policy.
In Ondo State, the National Association of Nigeria Students (Joint Campus Council), Wednesday staged a peaceful protest in Akure, over the naira scarcity.
This came barely 24 hours after residents blocked Benin- Shagamu Expressway in Ore in the Odigbo Local Government Area of the state over the issue.
Apart from the students, some civil society organizations joined in the protest on Akure- Ilesa Expressway, resulting in a massive traffic gridlock on the highway.
Commercial banks in Makurdi, the Benue State capital, on Wednesday, opened for business but not without long queues within and outside the banking halls.
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