Supreme Court Declares Old Naira Notes Valid Till 31st December 2023

The Supreme Court of Nigeria has declared the old naira notes valid till 31st December 2023. It was jubilation galore across the country yesterday following the ruling of the Supreme Court that the old N1,000, N500 and N200 bank notes should remain in circulation till the end of the year.

The CBN had in October 2022 announced the redesign of N200, N500, and N1,000 notes, and asked Nigerians to deposit their old notes before January 31, 2023 when they would cease to be legal tender. The deadline was shifted to February 10, 2023 following difficulties obtaining the new notes.

Thereafter, governors of Kaduna, Zamfara and Kogi states dragged the federal government and the CBN to the Supreme Court over the time limit, and the court gave an interim order suspending the February 10, 2023 deadline. The three states were later joined by 13 other states bringing the total number of plaintiffs to 16, just as two other states took the side of the federal government.

Yesterday, a seven-man panel of the apex court presided by Justice John Okoro, ruled that the old Naira notes should circulate alongside the new naira notes until December 31, 2023. The Supreme Court declared the Naira redesign policy invalid on the grounds that it was not done with due consultation and in line with constitutional provisions.

The apex court held that “no reasonable notice was given as required by Section 20 (3) of the CBN Act, adding that the public only became aware of the policy through press remarks, which cannot qualify as a notice to the public. Justice Emmanuel Agim, who delivered the judgment held that President Muhammadu Buhari cannot unilaterally take such a decision of currency redesign without consulting stakeholders which the plaintiffs are a part of and to that extent his actions are invalid.

Justice Agim, added that the CBN Governor’s meeting with the state governors to explain the policy was not only an afterthought but also an admission that the federal government ought to have consulted the plaintiffs including other stakeholders before commencing the implementation of the policy.

Furthermore, Justice Agim stated that the president in his February 16, 2023 broadcast admitted the hardship Nigerians are going through as a result of the policy. While stating that such a policy of Naira redesign is usually realized through partnership and not by handing down to the people, Justice Agim pointed out that the three-month timeline was not only too short, and maintained that the deadline was not in tune with the CBN’s Act and as such, unconstitutional.

Besides, the apex court argued that President Muhammadu Buhari misused the powers of the CBN when he issued the directive banning the old N1,000, N500 and N200 notes on February 10, 2023. The panel in their unanimous decision berated the president for disobeying the orders of the court halting the banning of the old Naira notes.

“The disobedience of the orders of the Court is a sign of the failure of rule of law”, the apex court held and subsequently granted all the reliefs sought by the plaintiffs. Amongst the reliefs granted is a declaration that the demonetization policy is inconsistent with the CBN Act.

The apex court also declared that in issuing the policy, the president is under an obligation to carry the national council of states along. The court in addition declared that the policy has impeded the functions of state governments, adding that the directive of the president is illegal, unconstitutional, null and void. Justice Agim accordingly ordered that the old version of the Naira notes shall continue to be legal tender with the new Naira notes until 31st December 2023.

Earlier, the apex court had dismissed the federal government’s objection to the hearing of the suit on the claim that the court lacked jurisdiction to do so. According to the apex court, there was sufficient evidence to show that the dispute is between the federal government and the state and not the CBN as argued by the defendants.

Besides, the apex court held that the issue of joining the apex bank as a necessary party does not arise since it is an agent of the federal government. “The CBN does not need to join when its disclosed principal has been sued. It has been held in many cases that an agent of a disclosed principal is not a necessary party. This suit is not between banks. It is therefore not within the exclusive jurisdiction of the Federal High Court. It is a dispute between some states and the federation over the way and manner the federal government made a policy without the involvement of the national council of states,” Justice Agim held.

Before delivering its verdict yesterday, the apex court had issued an interim order against the federal government on February 8, 2023 asking it to put on hold the implementation of the policy pending the hearing and determination of the case of the state governments.

Kaduna State Governor, Nasir el-Rufai yesterday described the apex court’s ruling on the old Naira notes as a victory for Nigerians. Speaking with Journalists in Kaduna State, the governor reiterated that the policy was designed to prevent the APC from winning the elections. “A full court of seven justices gave unanimous judgments that all our prayers to the court have been accepted. This is a victory for Nigerians,” el-Rufai said.

“But this policy which was designed and targeted at a political party and its candidates has brought hardship on our people, this is why the three of us took the decision to come to the supreme court. We are APC members, the president of Nigeria is from the APC, but we disagreed with him on this policy and its implementation and when we tried everything to settle this behind closed doors, we had no option but to come to the supreme court.

“The other decision of the Supreme Court is that the policy of currency confiscation where you deposit money in the bank and the bank chooses what to give you is unlawful and illegal. Nigerians can go to the bank and collect whatever they have deposited and get on with their lives.

“Those that said we went to the court because of elections are wrong. We went to court because our people in our states are suffering and businesses in our states are coming to a halt, lives are being destroyed, that’s why we went to court. “We left elections in the hands of God and we all know the result. Although this policy was designed to ensure that we did not give them the essential edge in the elections, we have won.”

The Speaker of the House of Representatives, Femi Gbajabiamila, has hailed the decision of the Supreme Court, which invalidated the deadline for the currency policy introduced by the CBN. Gbajabiamila noted that by the decision, the apex court has once again proved that it is the highest court of justice in the land. He said the House had faulted the implementation of the policy as it went contrary to the law establishing the CBN, and that the Supreme Court’s decision has validated the position of the House.

In a press statement yesterday, Gbajabiamila said, “It has always been the position of the House of Representatives that despite the noble intentions behind the currency swap policy, the design and implementation of the policy have been fatally flawed and contradictory to the ends of law and public policy. “The decision of the Supreme Court suspending the currency swap policy introduced by the Central Bank of Nigeria (CBN) and extending the implementation deadline to December 31, 2023, validates the position of the House in its entirety.”

Describing the implementation of the policy as “remarkably haphazard,” Gbajabiamila stated that it fell way short of international standards. “It deviated from the prior practice of the Central Bank of Nigeria (CBN) without providing any benefits to the Nigerian people or the economy of Nigeria, both of which have suffered significant harm as a result.” He said the CBN must respect the apex court’s judgments and act quickly to give it full effect.

However, The All Progressives Congress (APC), North-west chapter has called for the resignation of the Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami and the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele over the Naira redesign policy.

The APC National Vice Chairman, North-west, Dr. Salihu Lukman in a statement issued yesterday said party leaders from the region expressed delight over the ruling of the Supreme Court declaring the federal government’s Naira redesign policy as unconstitutional and a violation of the fundamental rights of Nigerians as provided under the 1999 Nigerian Constitution, as amended.

He noted that it was also unfortunate that President Muhammadu Buhari could be misled into such acts of illegality and abuse of executive powers as pronounced by the Supreme Court. The APC chieftain said given the injurious nature of the consequences of the cashless policy of the federal government as was implemented thus far, and the damage of the Supreme Court ruling to the profile of Buhari, Emefiele and Malami must take personal responsibility for this act of illegality by the federal government.

Lukman stressed that in advanced democracy, public offices who commit such acts of illegality voluntarily resign from their appointments. He added, “Therefore, if indeed, the cashless policy of the federal government was supposedly designed to conform with extant legal provisions of the Nigerian Federation, now that it turned out in the direct opposite, both Emefiele and Malami should accept the limitations of both their knowledge of the law and commitment to democracy by resigning from their respective offices forthwith.”

However, the Supreme Court judgment on old naira notes does not stop CBN cash withdrawal limits. The latest Supreme Court ruling reversing the central bank deadline for using the old N1000, N500, and N200 notes as legal tender may not apply to the central bank’s cash withdrawal limits.

The Supreme Court of Nigeria on Friday issued a judgement reversing the central bank’s policy on the introduction of new naira notes. In a unanimous judgement held on Friday, the apex court of the land chided the president’s approval of the policy as unconstitutional and a breach of the fundamental rights of Nigerians.

Justice Agim who read the judgement held that the President acted Ulta vires by his glaring failure to consult with the National Council of States, Federal Executive Council (FEC) and the National Economic Council (NEC) before directing the Central Bank of Nigeria to unlawfully introduce new Naira notes. He held that the unconstitutional use of powers by Buhari on Naira Re-designing has breached the fundamental rights of Nigerian citizens in various ways.

Despite the ruling, the judgments may not affect the apex bank’s policy on cash withdrawal limits as the matter was deliberated on by the supreme court of the land. Thus, despite approving the spending of the old notes as legal tenders, it will not stop the central bank from continuing with its policy of cash withdrawal limits considered the major issue affecting Nigerians.

The Central Bank of Nigeria (CBN) had in December 2022 announced a new policy that mandates deposit money banks and other financial institutions to ensure that over-the-counter cash withdrawals by individuals and corporate entities do not exceed N100,000 and N500, 000, respectively, per week. The revised cash withdrawal limits, contained in a circular took effect nationwide on January 9, 2023.

The policy has been mostly chaotic with long queues appearing in banks across the country and often leading to violence and protests. Nigerians have complained bitterly about the policy especially when online banking services have also been fraught with system downtimes.

After several complaints the Central Bank of Nigeria (CBN) in January 2023 reviewed the policy, increasing weekly withdrawals for individuals and corporate organizations to N500,000 and N5 million, respectively. Despite this, banks still do not have enough cash to dispense to customers while many ATMs still record long queues and limited withdrawals. The cash scarcity has only continued to frustrate more Nigerians especially poor people who rely on cash for their livelihood.

The Central Bank of Nigeria (CBN) claims the policy is designed to reduce the amount of money in circulation as estimated at about N3 trillion at that time. The CBN mentioned that the policy on revised cash withdrawal limits is in line with its cashless policy and was to encourage more Nigerians to use alternative channels such as USSD, debit cards, POS, eNaira to carry out their banking transactions.

It also said the policy is also part of the apex bank’s plans to protect the newly redesigned banknotes and guard against their misuse, counterfeiting, and hoarding. Since then, a combination of the introduction of new naira notes and the cash withdrawal limit policy has led to a reduction in currency in circulation, reducing to about as low as N1.39 trillion in January 2023. This represents the lowest level since December 2015.

In addition, currency outside banks, which represents the total currency in the hands of the public, fell to a record low ofN788.92 billion in January 2023 according to data from the Central Bank of Nigeria. The apex bank was also able to mop up N1.78 trillion from the hands of the public with its monetary policies, reducing the currency outside the vaults of the banking system from N2.57 trillion recorded as of December 2022 to N788.92 billion.

While the state government’s aim was the reintroduction of the old naira notes, Nigerians suffered more from the unavailability of cash whether old or new. The Supreme Court judgment is therefore unlikely to make the situation improve except the apex bank agrees to increase the cash withdrawal limit.

The Central Bank of Nigeria has independence over monetary policies and is within its right to impose cash withdrawal limits from commercial banks. However, these powers can also be challenged in court especially if it is viewed as trampling on the fundamental rights of Nigerians. POS operators had threatened to take the central bank to court over the cash withdrawal policy. Should the central bank continue to limit over the counter withdrawal of cash and limit the amount of cash released to banks, there is the likelihood that more stakeholders may take the apex bank to court to challenge the decision.