- Approves only old N200 as Legal Tender till April 10
President Muhammad Buhari has directed that only old N200 notes remains a legal tender till April 10, insisting however that old N500 and N1000 notes have ceased to be valid since February 10, 2023.
The president stated this during a national broadcast on Thursday morning on the challenges of the currency swap exercise and state of the nation.
The address of the president came on the heels of cash crunch crises in the country following the insistence of the Central Bank of Nigeria (CBN) to phase out the old notes by February 10, despite scarcity of the redesigned versions of the notes needed to replace them.
President Buhari said during the extended phase of the deadline for currency swap between January 31 and February 10, he had listened to invaluable pieces of advice from well-meaning citizens and institutions across the nation.
He said he also consulted widely with representatives of the State Governors as well as the Council of State.
He added that he is aware that the subject matter is before the courts of land and that some pronouncements have been made regarding the matter.
Buhari said in his address that to further ease the supply pressures cash in circulation, “I have given approval to the CBN that the old N200 bank notes be released back into circulation and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes ceases to be legal tender.
“In line with Section 20(3) of the CBN Act 2007, all existing old N1000 and N500 notes remain redeemable at the CBN and designated points.”
Confusion Heightens
Recent developments around the naira swap exercise have created confusions for Nigerians following conflicting pronouncements by the Presidency and the CBN on the one hand and the Supreme Court on the other.
The Supreme Court on February 8 ordered that the old notes remain as legal tenders till a final decision is made on the matter. In a sharp contrast however, the CBN on February 14 declared that the validity period of old N1000, N500 and N200 had ended on February 10.
Meanwhile, The Supreme Court on Wednesday February 15 reaffirmed the validity of the use of old 200, 500 and 1000 naira notes.
The apex court maintained that the February 8 hearing which paused the implementation of the February 10 deadline ban on the use of old naira notes still subsisted.
The clarification from the court followed a complaint by Abdulhakeem Mustapha (SAN), lawyer to the Kaduna, Kogi and Zamfara states respectively.
A seven-man panel of the Supreme Court last Wednesday in a unanimous ruling granted an interim injunction restraining the Federal Government from implementing the Central Bank of Nigeria’s February 10 deadline for the swapping of the old naira notes with the new ones.
Even as the apex court adjourned further sitting on the case to February 22, President Buhari’s declaration on Thursday morning, has further bewildered Nigerians.
Business Metrics observed that the business environment is being disrupted for a paucity of the redesigned notes, while many Nigerians with the old notes at hands are unable to meet their basic needs as the money is being rejected.
Genesis of the Crisis
In the last quarter of 2022, President Buhari authorised the Central Bank of Nigeria (CBN) to redesign the N200, N500, and N1000 Nigerian banknotes.
He also approved that the redesigned banknotes should circulate concurrently with the old bank notes, till 31 January 2023, before the old notes cease to be legal tender.
The president in his Thursday address ricocheted reasons given earlier by Godwin Emefiele, Governor of the CBN, on why the government had to implement the policy.
According to Buhari, these include the need to restore the statutory ability of the CBN to keep a firm control over money in circulation, adding that in 2015 when his administration commenced its first term, Currency-in-Circulation was only N1.4 trillion.
He said: “The proportion of currency outside banks grew from 78% in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation;
“The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth
“Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population; and
“Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria.”
However, indications are rife that the government has failed to provide adequate new notes to replace the old ones being mopped up from the systems, thus engendering difficulties for Nigerians to have access to money in their bank accounts in cash form.
The President acknowledged these difficulties by given a 10-day extension till February 10 as the new deadline for the old note but to no avail.
“In appreciation of the systemic and human difficulties encountered during implementation and in response to the appeal of all citizens, an extension of ten days was authorized till 10th February, 2023 for the completion of the process.”
Wide gap to Bridge after N2.1 Trillion mop-up
Since the exercise the began, Buhari said the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative.
However, the gains referred to by the President is about old notes so far mopped up from the system even when there exists a huge gap in replacing the old notes with new ones.
Specifically, he said, “I have been reliably informed that since the commencement of this program, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved. This represents about 80% of such funds.”
On the contrary, sources said that just about N300 billion new notes has so far been released to replace the N2.1 trillion withdrawn from the system.
This is leading to the current biting cash scarcity that is generating controversies and culminating to crises in some part of the country properties have been destroyed and even lives lost.
