In October 2022, the Central Bank of Nigeria (CBN) announced that it intends to demonetise the higher denominations of the Naira notes—₦200, ₦500 and ₦1000 starting January 31, 2023. This was later extended to February 20, 2023, due to the unavailability of the new Naira notes.
The demonetization, according to Godwin Emefiele, CBN Governor, will reduce the significant hoarding of banknotes by members of the public. At the time, over 85% of Naira notes (₦2.73 trillion of ₦3.23 trillion) in circulation were outside the vaults of commercial banks.
October 2022
Circulation: ₦3.23trn
Banking Industry: ₦500bn
People’s Homes: ₦2.7trn
January 2023
Circulation: ₦3.23trn
Banking Industry: ₦2.4trn
People’s Homes: ₦900bn
Emefiele also said the process will enable the CBN’s cashless transactions policy, and it will reduce the use of illicit and counterfeit cash to fund illegal activity and terrorism.
However, the demonisation process has led to cash shortages for the past three weeks, agency bankers are charging withdrawing customers about 10-20% of withdrawn cash. Meanwhile, the queues inside banks and ATMs queues across the country have been overwhelming. For instance, a bank customer reportedly slumped and died after standing in a queue for long hours at a bank in Agbor, Delta State.
Nigerian commercial banks argue that the CBN has supplied only a few redesigned Naira notes to replace the demonetised notes. Meanwhile, the country’s anti-corruption agencies—EFCC and ICPC—and President Muhammadu Buhari said that some of these banks are hoarding the new Naira notes.
The arrest came two days after the Independent Corrupt Practices and Other Related Offences Commission (ICPC) said it arrested two bank officials in Osun State, for refusing to load their ATMs with cash.
“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 International Monetary Fund (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,” Ari Aisen, IMF’s Representative in Nigeria, said.
Following a lawsuit by three APC governors from Northern Nigeria—Kaduna, Kogi and Zamfara—challenging the Naira redesign, the Supreme Court, yesterday (Feb. 9, 2023), temporarily halted the enforcement of the Feb. 10 Naira swap deadline pending the hearing of a lawsuit which has been adjourned to February 15.
Since the commencement of the currency swap which is coming a few days before the highly anticipated general elections in the country, members of the ruling party, APC, have been divided, by extension the Nigerian political scene. “Elements in the Aso Villa (Nigeria’s Presidential office) want us to lose the elections because they didn’t get their way [during last year’s party primaries],” Nasir Ahmad el-Rufai, governor of Kaduna, told TVC News. This aligns with the thoughts of Bola Tinubu, the APC presidential candidate who was recently endorsed by President Buhari.
The two other top presidential candidates, Atiku Abubakar of the PDP and Peter Obi of Labour Party have since supported the demonisation process which has been seen by some public analysts as an effective way to curb vote buying during the elections.
This ruling was due to an ex-parte application brought by four minority and opposition parties in the country.
“Some argue on the jurisdiction of the Supreme Court to even give such an order, others are of the opinion that the court can. However, we will have to wait for the next hearing,” a Nigerian legal analyst told Benjamindada.com. “The Court only stopped the process “for now” so they can hear the main matter on Wednesday because if they allow it to go on, it will defeat the aim of the entire suit”.
While we wait for the next hearing, the struggle for the new and old Naira notes continues as only a few are in circulation.
