February 6, 2023

Naira Scarcity: Kogi, Kaduna, Zamfara drag FG to Supreme Court

By Ikechukwu Nnochiri

ABUJA–Perturbed by the adverse effect of the  Naira redesign policy of the Central Bank of Nigeria, CBN, on residents of their states, governments of Kogi, Kaduna and Zamfara states, on Monday, dragged the Federal government before the Supreme Court.

The three states, through their respective Attorneys-General, are seeking an order of interim injunction to restrain FG and the CBN from stopping the use of the old N200, N500 and N1000 denominations as valid legal tenders, from February 10.

They are praying the apex court to halt the planned full implementation of the policy on use of the new Naira notes.

The plaintiffs, in the suit that was accompanied with an ex-parte application, relied on Section 22 of the Supreme Court Act, to invoke the original jurisdiction of the Supreme Court under 

The three northern states, through their team of lawyers led by Mr. AbdulHakeem Mustapha, SAN, are praying the court to, in the interim, bar FG, either by itself or acting through the CBN, the commercial banks or its agents, from carrying out its plan of ending the timeframe within which the now older versions of the 200, 500 and 1000 denominations of the Naira, may no longer be legal tender on February 10.

The Attorney-General of the Federation and Minister of Justice, Abubakar Malami, SAN, was cited as the sole Respondent in the matter.

Specifically, the states are seeking a declaration that the Demonetization Policy of the Federation being currently carried out by the CBN under the directive of the President of the Federal Republic of Nigeria, is not in compliance with the extant provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended), Central Bank of Nigeria Act, 2007 and actual laws on the subject.

A declaration that the three-month notice given by the Federal Government of Nigeria through the CBN under the directive of the President of the Federal Republic of Nigeria, the expiration of which will render the old banknotes inadmissible as legal tender, is in gross violation of the provisions of Section 20(3) of the Central Bank of Nigeria Act 2007 which specifies that Reasonable Notice must be given before such a policy.

A declaration that given the express provisions of Section 20(3) of the Central Bank of Nigeria Act 2007, the Federal Government of Nigeria, through the CBN, has no powers to issue a timeline for the acceptance and redeeming of banknotes issued by the Bank, except as limited by Section 22(1) of the CBN Act 2007. The Central Bank shall at all times redeem its bank notes.

Besides, the states want the court to direct the immediate suspension of the demonetisation of the Federal Government of Nigeria through the CBN under the directive of the President of the Federal Republic of Nigeria until it complies with the relevant provisions of the law.

The plaintiffs told the apex court that since the CBN announced the new naira policy, there has been an acute shortage in the supply of the new naira notes in their respective states.

They descried that residents in their states who complied with CBN’s directive and deposited their old naira notes, have increasingly found it difficult to access new naira notes to conduct their daily businesses.

They maintained that the inadequacy of the new naira notes as well as the haphazard manner the monetary policy was being implemented, has wrought serious hardship on residents in their states, stressing that the 10-day extension of the deadline would not be sufficient to address the challenges occasioned by the policy. 

In an affidavit the plaintiffs filed in support of the suit, which was deposed to by the Attorney General and Commissioner for Justice of Kaduna State, Aisha Dikko, they told the apex court that although the naira redesign policy was introduced to encourage FG’s cashless policy, they noted that not all transactions could however be conveniently carried out through electronic means.

Dikko averred that several transactions still require cash in exchange for goods and services hence the need for the Federal Government to have sufficient money available in circulation for the smooth running of the economy.

“That the majority of the indigenes of the Plaintiffs’ states who reside in the rural areas have been unable to exchange or deposit their old naira notes as there are no banks in the rural areas where the majority of the population of the states reside.

“Most people in rural areas of the Plaintiffs’ states do not have bank accounts and have so far been unable to deposit their life savings which are still in the old naira notes.

“There is restiveness amongst the people in the various states because of the hardship being suffered by the people, and the situation will sooner than later degenerate into the breakdown of law and order.

“The Plaintiff State Governments cannot stand by as they are duty-bound to protect citizens in their states and prevent the breakdown of law and order.

“I know that if the Federal Government of Nigeria had given sufficient and reasonable time for the naira redesign policy, all the current hardship and loss being experienced by the Plaintiffs’ State Governments as well as people in the various states would have been avoided.

“I know that the 10-day extension by the Federal Government is still insufficient to address the challenges bedevilling the policy. I also understand that the Federal Government cannot bar Nigerians from redeeming their old naira notes at any time, even though the senior notes are no longer legal tender.

“Unless this Honourable Court intervenes, the Government and people of Kaduna, Kogi and Zamfara State will continue to go through a lot of hardship and would ultimately suffer great loss as a result of the insufficient and unreasonable time within which the Federal Government is embarking on the ongoing currency redesign policy,” the plaintiffs added.