Banknotes: CBN’s directive too little, too late

SOME respite is finally in sight for Nigerians, who have in the past two months suffered greatly due to the acute scarcity of cash for basic transactions. In a belated announcement, the Central Bank of Nigeria stated that the old N200, N500 and N1,000 banknotes that it is replacing remained legal tender alongside the newly redesigned banknotes. It was long overdue.

Lawless as ever, the President, Major General Muhammadu Buhari (retd.), had in succession, first countermanded, and later, ignored Supreme Court rulings authorising the continued usage of the old banknotes. The equally reckless CBN Governor, Godwin Emefiele, followed suit and cash became a very scarce commodity, thereby inflicting misery on the citizens. The CBN must now do everything possible to make both the old and new banknotes available and unshackle the economy from the unwarranted gridlock.

There are lessons to learn in the currency redesign policy, the subsequent problems it created, and the riotous way in which it was implemented with all the unintended consequences.

A major reality is that Nigeria’s supposed democratically elected government wilfully imperils the supremacy of the rule of law. Buhari epitomises this; Emefiele has borrowed from his playbook. It took the Federal Government and the CBN an entire 10 days to obey the Supreme Court in its substantive judgement that mandated the use of old banknotes as legal tender till December 31, 2023.

Emefiele had before the March 13 announcement, pointedly ignored the highest court’s judgement, which ordinarily, should be immediately complied with, acting only after intense pressure from the populace, including state governors, lawyers as represented by the Nigerian Bar Association, the organised private sector, and labour unions.

He said the decision to allow the old banknotes to remain legal tender till year end followed a meeting with the CBN Bankers’ Committee that was held on March 12. He offered no apologies. Banks will now dispense limited amounts; clearly, it will take time for normalcy to return.

The Attorney-General of the Federation, Abubakar Malami, as the chief law officer, also tainted his office. If he protested this latest assault on the rule of law to the President, it is not in the public domain. It took threats by the state governments to initiate contempt of court proceedings against him and the CBN governor, and rumblings of an impending nationwide strike by organised labour to finally shake the three officials out of their defiance. Insolently, they had hitherto ignored public wailings and suffering.

While Buhari had made a national broadcast decreeing the acceptance of only the old N200 banknote in direct contradiction to the initial interim order made by the Supreme Court ruling that the all the banknotes, including the N500 and N1,000 ones should continue to be used pending its final judgement, he failed to promptly issue a directive in obedience to the final court order. Instead, in the belated statement by its spokesman, Garba Shehu, the Presidency said it never asked anyone to disobey the ruling, thereby shifting responsibility to Emefiele.

The statement read, “The Presidency wishes to react to some public concerns that Buhari did not react to the Supreme Court judgment on the issue of the N500 and N1,000 old currency notes, and states here plainly and clearly that at no time did he instruct the Attorney-General and the CBN governor to disobey any court orders involving the government and other parties.”

Their impunity is insufferable. The Supreme Court had emphatically declared his legal power to direct the CBN on the currency matter. He dithered.

Now, they should work hard to breathe life into the economy.The effect of the CBN’s bungling and Buhari’s rashness may take years to wear off. Needless deaths have been recorded as a result of the hardship occasioned by the lack of money to buy food and other basic necessities, and during riots that followed the implementation of the policy.The Centre for the Promotion of Private Enterprise estimates that the economy may have lost up to N20 trillion following deceleration, commercial meltdown, paralysis of the rural and informal economies, and job losses.

In 17 reported attacks on branches nationwide, the banks said they lost assets worth N5 billion. Automated Teller Machines, buildings and vehicles were vandalised and torched by angry customers and criminals capitalising on the chaos. Unquantifiable amounts have also been lost to the network problems that characterised failed transfers and other non-cash payments. There are fears that some of these funds may never be recovered by their owners.

The OPS reports that many small businesses have crashed as most SMEs in Nigeria rely on cash transactions. Traders in perishable items lost their produce due to their inability to access cash.

A similar banknote redesign policy introduced by Buhari as a military Head of State, which failed in 1984, was what he fell back on in 2023 in a move ostensibly to prevent vote-buying by politicians, reduce the currency in circulation, and help to curb insecurity like kidnapping-for-ransom, banditry and money laundering. But the dynamics of modern economies have changed; brute force and policies that belong to the past era cannot solve current problems.

Buhari and Emefiele have inflicted unnecessary hardship on Nigerians and the economy; they should now pull out all the stops to remedy the debacle. The CBN should work round the clock to make both old and new notes available, accepted by the banks, businesses, and individuals in accordance with the court judgement.

The CBN should severely punish banks and bankers that reject old banknotes or fail to dispense cash when available on all their channels. The government should mobilise the police to arrest and prosecute hoarders of cash, shylock PoS operators, bankers, and those who abuse the naira by “spraying’’ it at social events. Traders, transporters, and service providers that reject old banknotes should be arrested and prosecuted. The state governments should follow up their orders that all banknotes be freely used with massive public enlightenment, assuring the public that their money remains legal tender till December.