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Saturday, March 25, 2023

Old Naira Notes Lose Legitimacy Despite Supreme Court’s Ex-parte Order

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The old Naira notes of N200, N500 and N1000 have lost their legitimacy in the eyes of the public such that even courts are rejecting them.

Specifically, lawyers and litigants were yesterday prevented from filing court processes at the Lagos High Courts, as officials insisted they would only accept new naira notes.

Consequently, many lawyers and litigants were turned back by court officials at the registry, saying the banks no longer accept the old N200, N500 and N1000 notes as legal tender.

The currency rejections happened as a member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), Professor Mike Obadan, yesterday, alleged that the naira redesign policy was becoming chaotic due to resistance from some powerful Nigerians opposing it for personal interests.

The Supreme Court had in a ruling on February 8 suspended the CBN’s February 10 deadline to stop the use of old currency notes.

The bank had ordered citizens to swap out old N1, 000, N500, and N200 banknotes for a redesigned currency by the deadline.

But the apex court, ruling in an ex parte application by three states – Zamfara, Kogi and Kaduna – stopped the CBN from banning the old notes pending the hearing and determination of the case. It fixed February 15 for hearing. The move to ban the old banknotes had caused confusion among bank customers.

A seven-member panel of the court, led by John Okoro, gave the order of interim injunction.

Speaking on a panel on the state-owned Nigerian Television Authority (NTA), Obadan, a professor of economics, noted that the apex bank was not ill-prepared for the currency redesign exercise, but some unscrupulous persons were sabotaging the process.

The presidential candidate of All Progressives Congress (APC), Bola Tinubu, recently alleged that the policy was targeted at him, while several governors in his party have approached the Supreme Court to halt the process as well as allow the new and old notes to circulate together.

But Obadan wondered why the new naira notes appeared to be scarcer the more the CBN pumped new notes into circulation, saying “it seems that snakes are swallowing it.”

He added, “I would like to say that the challenges that Nigerians have seen and the kind of pain people are experiencing is not due to the fact that the central bank is ill-prepared or was not prepared for the implementation. This is not because I am connected in a way to the Central Bank of Nigeria.

“If you observe the situation, right from the beginning of implementation, you will find that there had been resistance to the implementation of the policy. There are vested interests that right from day one did not want the policy to be implemented because they perceived that implementation of the policy would hurt their own private interests.

“And so they have been at war with the central bank, sort of, doing everything to thwart the implementation of the policy. The Central Bank of Nigeria has been pushing out new Naira notes, invariably every week. I don’t know how many times it does that to banks…for onward disbursement to various individuals, enterprises and so on.

“Unfortunately, the more the new notes are given out by the central bank, the more you hear cries that there are shortages and of the central bank not pushing out enough new Naira notes as the monetary authority.”

According to the MPC member, the CBN has the record of all the notes pushed out in recent days and, therefore, would not deliberately ensure that there are shortages within the system.

He stated, “The central bank knows the quantity of new notes that it expects to be in circulation in line with its set of objectives. And it’s been working in line with the objectives. They know the notes pushed into circulation. But the new notes appeared to be swallowed by snakes, or something else that tend to make the notes generally unavailable.”

He explained that the expectation was that as the new notes were pushed out by the central bank, they would go into circulation and economic agents and actors would use the notes and spread them.

“But you will find that most of the new naira notes are not in circulation,” Obadan said. “They are being hoarded for a purpose, for certain vested interests because more and more notes are being pushed into circulation every week,” he stressed.

Besides, Obadan argued that many Nigerians were already getting used to online payment platforms, which should ease the physical use of the local currency, reason why there should be no serious shortage of the new naira notes in circulation.

“So, it’s not that the central bank had a fault at the beginning in respect of implementation,” he noted.

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