Naira crisis: Govs fear recession, four more states join legal battle

More states have joined the legal battle against the Federal Government over the currency redesign policy of the Central Bank of Nigeria.

Attorneys-General of   Ekiti, Bayelsa, Sokoto and Rivers states told The PUNCH on Sunday that their states were set to join as co-plaintiffs in the suit filed by the governments of Kaduna, Kogi and Zamfara states.

The states are opposing the February 10 deadline for the currency swap policy on the grounds that it was inflicting suffering on their citizens.

Kano and Ondo had earlier joined the three states, which filed the suit number SC/CV/162/2023 at the Supreme Court.

This is as the Nigerian Governors Forum warned on Sunday that the crisis occasioned by the CBN policy might cause another economic recession in the country.

Following the application of the three northern states of Kaduna, Kogi and Zamfara, the Supreme Court last Wednesday issued an ex parte order restraining the Federal Government and CBN from enforcing the February 10 deadline for the swap of the old N1000, N500 and N200 notes.

But the Federal Government approached the apex court to vacate the order.

However, in the application filed on Friday and made available to The PUNCH on Sunday, Ekiti through its Attorney-General and Commissioner for Justice, Mr Dayo Apata, SAN, asked for three reliefs.

The state government is seeking “leave of this honourable court (Supreme Court) to join the applicant as a co-plaintiff in this suit; an order of this court joining Attorney-General of Ekiti State as a co-plaintiff in this suit; and for such order or further orders that this honourable court may deem fit to make in this circumstance of this suit.”

Apata premised the application on various grounds including “the acute shortage in the supply of naira notes in Ekiti State since the announcement of the policy by the Federal Government through the CBN.”

The state government also averred that “the directive of the Federal Government of Nigeria had affected the livelihood and had inflicted excruciating pain and hardship on all Nigerians, including citizens of Ekiti State.”

It also argued that the directive of the Federal Government has also adversely affected the revenue, levies and taxes accruable to the coffers of Ekiti State Government as economic activities in the state were now completely paralyzed.

The state government said, “The directive of the Federal Government of Nigeria on the naira redesign has also created palpable anxiety among the citizens of Ekiti State.

“Ekiti is a federating state of Nigeria and therefore has an interest in the determination of the originating summons in the suit earlier filed by the three states in the federation, having a common interest as other plaintiffs and also in the outcome of the suit, sought the leave of the court to be joined as a co-plaintiff in order to be bound by the outcome of the suit.”

It also stated that no injustice or embarrassment ‘’will be occasioned to any of the parties on record if it is joined as a co-plaintiff to ventilate the grievances of Ekiti State.’’

The state government supported its application with the argument that the apex court had always been of the stance that anyone whose presence is crucial and fundamental to a suit must be made a party to the proceedings.

Bayelsa to join

On Sunday, the Bayelsa State Government confirmed to The PUNCH that it would also file a joinder application to be part of the suit.

The state Attorney-General and Commissioner for Justice, Biriyai Dambo, disclosed this in a terse response to an inquiry by our correspondent.

He said, “Yes, Bayelsa will join in the subsisting suit at the Supreme Court.”

Also, there are strong indications that the Sokoto State government may join the suit opposing the time limit for the old naira notes.

Speaking with our correspondent, the state Attorney-General and Commissioner for Justice, Usman Sulaiman, explained that the state may join the suit following the resolutions of the Nigerian Governors Forum.

The commissioner revealed that he has made his recommendation known to the state governor, Aminu Tambuwal.

“There is a possibility of Sokoto State joining the suit based on the resolutions of the Nigerian Governors Forum. I have written to the governor on the next step and presently awaiting his response which will determine what to do from our end,” he disclosed.

On his part, the Rivers State Attorney-General and Commissioner for Justice, Prof Zacchaeus Adangor, said, “I will not give you a timeline, but when we file it, you will know.”

But the state Governor Nyesom Wike had last week said the state would join the suit.

In his comments on the interim injunction handed down by the apex court, Wike said the intervention of the Supreme Court was timely because some elements were bent on derailing the democratic process.

He spoke at the County State School, Emilaghan in Central Abua, the venue of Rivers State Peoples Democratic Party campaign flag-off rally in Abua/Odual Local Government Area on Wednesday.”

The Lagos State Government has equally expressed its readiness to join the suit, saying it is a matter of true federalism.

Responding to inquiries from The PUNCH on Sunday, the commissioner for Information, Gbenga Omotosho, said, “The Lagos State Government will likely join in the suit because it is about true federalism; it is about equity and justice. It is about everything that we cherished. It is about values. So we may likely join.”

Omotosho also said the state governor, Babajide Sanwo-Olu won’t hesitate to order the arrest of persons rejecting the old naira notes.

Meanwhile, the NGF has slammed the Central Bank of Nigeria for the difficulty being experienced by Nigerians owing to the scarcity of the new naira notes introduced by the apex bank.

The forum warned that the country is at risk of recession which will be the result of the naira exchange policy of the apex bank.

The position of the governors was contained in a communiqué issued at the end of their meeting on Saturday.

In the communiqué signed by the Chairman of the NGF and Sokoto state governor, Tambuwal, the governors criticised the CBN over the handling of the naira redesign policy, adding that the resulting naira note scarcity is causing hardship for Nigerians.

It read, “The argument by the CBN for what it describes as the astronomical increase in the currency in circulation as the basis for this policy is not supported by its own data.

“According to the CBN, the currency in circulation increased from N1.4 trillion in 2015 to N3.23tn in October 2022. The bank appears not to have taken into consideration the increase in the size of the country’s nominal GDP over this period, the doubling of consumer prices, the rising population, and the impact of the humongous Ways & Means advances to the Federal government by the Central Bank of Nigeria over this period.

“In the circumstances, it is safe to draw either of two conclusions – the CBN data may be incomplete or in fact, Nigerians may have done exceptionally well in the transition to a cashless economy.

“In addition, considering the sizable informal sector in the nation, the amount of banknotes created in exchange so far by the CBN implies it vastly underestimated the economy’s actual cash needs.

“The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the naira black market, severe food inflation, variable commodities prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines and banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood. The country runs the risk of a CBN-induced recession.”

While expressing sympathies and support for Nigerians who were experiencing difficulties as a result of the naira redesign policy and attendant consequences, the governors said they were “determined to employ all legitimate channels to ease the situation.”

“It has become necessary to make a distinction between the Central Bank of Nigeria naira redesign policy backed by section 20 (3) of the CBN Act, 2007 and the aspirational policy of going cashless, both of which are mutually exclusive at this time.

“It is our considered view that what the CBN is at present pursuing is a currency confiscation programme, not the currency exchange policy envisaged under S20(3) of the CBN Act, 2007.

“Currency confiscation in the sense that the liquidity provided to the general public is grossly insufficient due to the restrictions placed on the amount that can be withdrawn regardless of the amount deposited.

“The current approach of the CBN raises concerns about the respect for the civil liberties and rights of Nigerians as it relates to their freedom to use legitimately earned income as they so wish.

“The forum believes that to deploy a cashless policy and deepen digital transactions, the best practice around the world is to create a suite of incentives to attract customers; rather than a draconian approach as we have witnessed in the last three months,” the NGF further noted.

In a related development, the Bayelsa State Police Command said it had beefed up security around banks and ATMs in the state as a result of unrest, tension and disturbances over the scarcity of new naira notes.