Naira Redesign: CBN top officials meet ahead expiration of Supreme Court ruling

*Suffering of Nigerians worsens as more banks shut doors

*Naira gains amidst Nigeria’s economy uncertainties

By Motolani Oseni, Joy Obakeye, Chukwuwmeke Iwelunmo and Godwin Anyebe

Following the advice by the members of council of state to the Central Bank of Nigeria (CBN) on the need to ease the suffering of Nigerians, indications are rife that the apex bank’s management would be meeting today ahead of the expiration of the ex parte ruling by the Supreme Court on Wednesday, February 15, 2023.

The ex parte ruling by the Supreme Court suspended the scheduled February 10th deadline for the use of the old N200, N500 and N1000, notes, by the Central Bank expires on Wednesday.

Although, members of the council of state have expressed support for the naira redesign policy of the CBN, however, asked the CBN governor, Godwin Emefiele to make new naira notes available or recirculate old notes to ease the suffering of Nigerians.

The meeting, which held at the presidential villa, was presided over by President Muhammadu Buhari, backed the CBN policy, however, and expressed concerns about the implementation.

The council, therefore, advised the CBN to make money available in quantum, even as the old money can also be recirculated to ease the suffering of the poorest of the poor.

To this end, officials of the CBN will have an emergency meeting today (Monday) over the ongoing naira crisis.

Information gathered indicates that the CBN Governor, Godwin Emefiele will be present at the meeting with other top officials, while key decisions will be made.

Meanwhile, the Attorney General of the Federation and Minister of Justice, Abubakar Malami, in a recent during an interview on Arise Television recently said that the government was hopeful that the ex parte ruling which expires in two days on would be upturned.

Malami, who had on behalf of the Federal Government filed an objection and asked the Supreme Court to dismiss a lawsuit by 3 states (Kaduna, Zamfara, and Kogi States) over the naira redesign policy of the CBN, clarified that the Federal Government, out of its regard for the rule of law, would abide by the order of the apex court, even though it intended to challenge it and would do so within the provisions of the law.

Malami during the interview stated that it was within the right of the government to challenge any order it was not pleased with. He said the government would do so in this matter using the instrumentality of the law.

“The rule of law provides that there has to be obedience to the judgment and orders of the Supreme Court. The rule of law provides that when you are not happy with a ruling you can file an application for setting it aside and in compliance with the rights and privileges vested in us as a government, we are equally looking at challenging the order and seeking for it to be set aside”, he said.

It is, however, no longer news that some commercial banks operating in the country have shut their doors to the depositors, but it’s a fact that more lenders have followed suit as Nigerians continue to groan over scarcity of cash, both the new naira notes and the old denominations.

For instance, Zenith Bank has closed some of its branches in the Federal Capital Territory, FCT, and some states of the country, including Lagos State due to alleged attacks on its staff and network.

Checks have shown that some of the bank branches in the FCT, environs and other states on Friday were under locks.

An official of Zenith Bank who preferred anonymity said that some of the bank’s branches were also closed due to lack of the new naira notes.

The official said that many of their branches across the country were attacked by customers who were unable to withdraw the new notes from their accounts.

While customers of banks have taken to social media to lament their ordeal, some video clips showed how banks officials escaped from the attacked branches by scaling fences to escape mob attacks from customers.

Commenting on the ruling by the Supreme Court, Prof Uche Uwaleke, a former Commissioner for Finance in Imo State and a member of Nigeria’s Federation Account Allocation Committee (FAAC) Post Mortem Committee said: “As a law abiding and responsible Institution, I expect the CBN to temporarily halt the implementation of the February 10, deadline for the old 200, 500 and 1000 Naira notes to cease being a legal tender as directed by the Supreme Court pending the determination of a notice on notice on in respect of the issue on February 15th.

“This period is still within the 7 days grace period lasting till February 17 which the CBN had earlier announced for the old notes to be returned to the CBN. All over the world, especially where Central Banks are independent, the conduct of monetary policy is their exclusive preserve- a responsibility not encumbered by either the Executive arm or the Judiciary”, he explained.

According to him, it would amount to erosion of the apex Bank’s independence with dire consequences for the economy if the Supreme Court eventually gives a ruling that permanently cancels the currency redesign policy.

“Rather than a permanent halt, what is required is for the CBN to join hands with stagivento to fine-tune it in view of its many laudable objectives else we end up throwing away the baby and the bath water.

On his part, the Chief Executive officer of the Centre for the Promotion of Private Enterprise (CPPE) Muda Yusuf, who had commended the restraining order of the Supreme Court on the timeline for the currency swap, urged the Central Bank to immediately allow the old and new currency notes to co-circulate until such time when the old notes are gradually and completely withdrawn.

“This is global best practice. This should happen within a space of three to six months.

According to him, I believe this would restore normalcy to economic activities, especially in the distributive trade sector, the informal sector and the rural economy.

“Meanwhile, all the cash that has been mopped up should be released to their owners, unless there are reasons to suspect such lodgments and this should be escalated to the antigraft agencies. Citizens that have lodged their cash for purposes of the cash swap should be allowed unfettered access to their money.”

He lamented that small businesses and ordinary citizens were the biggest victims of the unspeakable disruption and hardship inflicted by the impractical deadline given by the Central Bank of Nigeria (CBN) on cash swaps. “They are the biggest users of cash”.

Aviation industry experts, who responded to The Daily Times enquiry, said nothing has changed since the ruling but that currency exchange period was too short.

Olumide Ohunayo an aviation expert said the time for the exchange was too short and needed more time for the exchange of the old notes

Ohunayo said government does not have a choice than obey the order as the new notes pushed into the economy has been exhausted and citizens pushed to the wall

He said it was necessary for extension adding that three months would have been better for the exchange as most interland does not have the facilities for the exchange

Ohunayo envisaged crisis assuming there was no shift in the period for the exchange.

Mr Kingsley Ezenwa, Image maker of Dana air, said there has not been any significant impact and the pronouncement was being watched and monitored by the airline

According to Ezenwa, the airline has been doing its own normal load factor as most passengers purchased tickets on line adding that most of passengers have resulted to using POS for transaction

“We are still doing about 80% factor so there hasn’t been any noticable impact. Although most of the passengers have had to resort to transfers, using POS where applicable and where funds are available”

He however noted that transferring fund was a bit difficult as a result of poor network

“The network for the transfers have also not been too great but we keep managing the situation with the banks around the terminal”.

Ezenwa said on the Supreme Court ruling, that they were monitoring the trend and follow directives.

“For the directive, we would keep monitoring to see what’s next. We can’t say for sure what the situation might be per SE on expiration of the extension for now.

A lawyer and a public affairs commentator, Dele Farotimi said, the Supreme Court ruling restraining the federal government from implementing the February 10, 2023 deadline phase out of the old naira note is nothing but hypocrisy of the highest order.

According to him, the subject is about jurisdiction and jurisdiction goes to the root of any power that the court might care to assume. A case was taken before the Federal High Court on the same subject and the Federal High Court correctly ruled that it had no power. In my own opinion, I am not a practising lawyer.

“Now, when the CBN has acted even outside of its powers, it must necessarily be a party in a suit directed at its action or in action. When you have a situation where a matter such as this one has drawn public attention and we must understand that it is not only the letter of the law, it is the spirit of the law that must be clearly seen to have been observed.” He added.

For him, the CBN and commercial banks were not parties to the suit filed by three state governors the state governments simply took advantage of the fact that in matters purely between state and the FG, the Supreme Court can serve as the court of first and only instance.

“The governors that approached the supreme court on the matter did so for political interests and not the interest of the people because, there are other issues in their states for which they refused to give urgent attention to”, he added.

Meanwhile, the CBN says the naira redesign policy is to promote financial inclusion and aid security agencies’ efforts in tackling insecurity.

Speaking on Saturday at the 44th Kaduna international trade fair, Osita Nwasinobi, the spokesperson of the CBN, urged Nigerians to embrace alternative payment channels such as eNaira and internet banking.

Nwasinobi, represented by Mohammed Abbah, director of capacity development, said Godwin Emefiele, the CBN governor, had always emphasised that the redesign of the naira notes was “not targeted at anyone or any group of persons”.

“The principal aim of the bank, with the currency redesign initiative, is to make our monetary policy decisions more efficacious,” he said.

“Nigerians will observe that there has been a downward trend in inflation and the exchange rates have been relatively stable.

“Furthermore, we aim to increase financial inclusion in the country by reducing the number of the unbanked population.

“Thirdly, our aim is to support the efforts of our security agencies in combating banditry and ransom-taking in Nigeria through this programme.

“The CBN is not unmindful of the challenges some citizens have had to face in the past few weeks in efforts to get money from their banks or other alternative channels.

“Indeed, there have been reports of occasional transaction failures. However, we wish to assure you that the Nigerian payment system infrastructure is robust enough to handle the surging transaction volumes across all channels.”

Meanwhile, despite the current nation’s economic crisis, including the naira scarcity and fuel crisis, CBN Governor disclosed that the scarcity of naira notes across the country is not due to a shortage of printing materials at the Nigerian Security Printing and Minting Company (NSPMC).

Osita Nwasinobi, spokesperson of the CBN, who clarified the CBN statement at the meeting with the members of council, said in a statement Saturday that Mr Emefiele informed the National Council of State that the NSPMC was working to print all naira denominations to accommodate Nigerians’ transaction need.

“We wish to state categorically that at no time did the CBN Governor disclose this during his presentation to the National Council of State at its meeting on Friday, February 10, 2023,” the CBN said.

“For the records, what Mr. Emefiele told the meeting that the NSPMC was working on printing all denominations of the Naira to meet the transaction needs of Nigerians.”

The statement said the apex bank “appreciates the concerns shown by Nigerians and other key institutions about the distribution of the Naira”. It added that the bank is “alarmed at the extent to which vested interests are attempting to manipulate facts and pitch the public against the bank.

“For the avoidance of doubt, the CBN remains committed to performing its monetary policy functions, as stipulated in the CBN Act, 2007, as amended,” the statement said.

“We also wish to restate that the NSPMC has the capacity and enough materials to produce the required indent of the Naira.”

The bank also claimed that there is a misleading voice note trending in social media alleging that the CBN planned to shut down some banks, particularly in a particular geo-political region of the country.

“We wish to state unequivocally that there is no such plan and that the claims are illogical and do not comply with the workings of the Nigerian banking system.

Meanwhile, the Nigerian local currency, the Naira, appreciated to N461.10 to the United States (US) dollar at the Investors’ and Exporters’ foreign exchange (FX) window on day-to-day comparison amidst twists and turns in the economy.

The gain reported came as transactions level begin to nosedive amidst pressures in the local economy. Almost at the same, the US dollar index declined in the global market against major trading pairs after closing year 2022 on a solid footing.

In the market, traders reported that an exchange rate of N462 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.10.

The naira sold for as low as 439.96 to the dollar within the day’s trading. A total of 40.24 million dollars was traded at the official Investors and Exporters Window on Thursday.

In their respective sovereign ratings release, Moody’s and Fitch are hoping to see a significant devaluation of the naira after 2023 election – citing external pressures and weak buffer.

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Despite its stance to keep the naira strong, the Central Bank of Nigeria (CBN) market intervention has reduced compared to the pre-pandemic level. The shift comes even when foreign investors’ hot monies are practically lacking.

With the recent downgrades of Nigeria’s sovereign ratings to caat1 from B class by Moody’s, costs of borrowing from the international debt capital market is expected to increase.