Naira Scarcity Persists after Apex Court Order

Despite a court order that upturned the naira redesign policy, scarcity of the local currency has persisted as the Central Bank of Nigeria (CBN), and the Federal Government (FGN) keep mum over the Supreme Court judgement.

The problem with the implementation of the naira redesign policy which spooked the market and overall economic activities remained unresolved as critics think the CBN will enjoy FG backup with a forceful implementation of the policy.

The naira swap has revealed that Nigerian banks have low capabilities to implement a cashless economy. To process large volumes of online requests, many Nigerian banks were faced with various e-business related crises in the past weeks.

These banks have also been targets of irate Nigerians who took to the streets burning banking halls and damaging automated teller machines on the sides of the roads among other physical assaults on officials. The development resulted in asset losses. In reaction, local banks eventually closed down operations across the country.

Unfazed by the development, Nigerians are yet to access the new and old Naira notes days after the Supreme Court order reverting the Central Bank of Nigeria (CBN) directive to stop its use as legal tender from Feb. 10.

The News Agency of Nigeria reports that Deposit Money Banks (DMBs) in Abuja have yet to show compliance as residents still lack access in spite of queuing for hours at Automate Teller Machines (ATM) and Point of Sales (POS).

Supreme Court on Friday legalised the use of certain denominations of old Naira notes as legal tender until Dec. 31.

A visit to some DMB branches in Abuja revealed that neither the old notes nor the new ones were available; not even the N20, N50 and N100 notes that were not redesigned.

A bank official, who pleaded anonymity, told NAN that the bank had not started paying out the old notes because there is no directive from CBN.

According to the official, we do not even have the old notes to pay out to customers and the CBN has not commenced the disbursement of the notes.

Findings by NAN revealed that the seeming non-compliance by the Federal Government was due to inability to obtain the Certified True Copy (CTC) of the apex court’s judgment.

According to a staff of the Federal Ministry of Justice, who craved anonymity, the government must obtain the CTC before it can direct the CBN to comply with the judgment.

He said that efforts were on to obtain the judgment from the Supreme Court.

NAN recalls that the Supreme Court had invalidated the Naira redesign policy on the grounds that it was not done with due consultation and in line with constitutional provisions.

The apex court thus ordered that the old Naira notes should continue to be used side by side with the new notes until Dec. 31.

The court held that the three months timeline given by the Federal Government was also not in tune with the CBN Act.

A financial expert, Mr Okechukwu Unegbu, commended the Supreme Court for legalising the usage of the old Naira notes along with the new ones.

Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), said that the Naira redesign policy had inflicted avoidable pains on Nigerians.

According to Unegbu, the apex court’s judgment has nullified the actions of the CBN as regards the Naira redesign project.

He urged the CBN to immediately take steps to release the over two trillion Naira of the old currency it had mopped up through the DMBs.

“In other words, the currency should revert to what it was before, and every other person, including the President and members of the National Assembly should comply.

“For me, it is a good decision because people have suffered. Many people could not buy food and medicines due to the scarcity of money locked in banks.

“The apex bank said it had mopped up over two trillion Naira of the old currency, they should bring out that money through the banking system so that people can get money to move ahead and do their businesses,” he said.

Unegbu advised the CBN to execute the cashless policy in phases to avoid inflicting pain on Nigerians, especially the rural dwellers.

“There is no problem with the cashless policy but because of the state of the economy and the level of illiteracy, the CBN should have started implementation in phases.

“Cashless policy should start from urban and commercial centres like Lagos, Abuja, Port Harcourt and Kano before moving to the rural communities.

“You cannot make such a blanket decision in the Nigerian system because of the way we are.

“The shortage of cash is worse in rural communities, where some people have never even sighted the new notes,” Unegbu said.

He urged the CBN to go back to the drawing board and design a more effective and less cumbersome implementation of cashless policy and financial inclusion initiative.

Also, an Economist, Dr Tope Fasua, urged Buhari to direct the CBN governor, Godwin Emefiele, to immediately comply with the decision of the apex court by making the old and new Naira notes available to Nigerians.

Fasua also advised the CBN to ensure optimally functional internet capacities for the cashless policy to be effective.

According to him, cashless policy and financial inclusion are gradual processes which require time for the banks to improve their capacity and infrastructure.

“There is no country in the world where everybody is financially included; and there is no country that is totally cashless. It is a matter of effort and gradual progress.

“People should be allowed to embrace cashless by themselves, not by punishment,” he said.

Fasua said that what Nigerians had experienced in the last few weeks, with scarcity of cash due to the CBN’s Naira redesign policy would further alienate them from the cashless policy.

“Personally, I have been trying a USSD transaction for the past two hours; I have tried many times without success.

“This is because the platforms of the banks have been choked up, and they do not have capacity for the kind of uptick they are experiencing,” he said.

He, however, said that the apex bank had recorded some achievements with the Naira redesign policy as more Nigerians have embraced into it.

According to him, Nigerians will become even more comfortable with the policy when the DMBs improve their online banking capacity.

Fasua also commended the Supreme Court for its decision on the Naira redesign, and for extending the legal status of the old N200, N500 and N1,000 to Dec. 31.

“It is good that the Supreme Court has taken that decision because the policy has been painful and seems to have derailed from what was intended.

“Transactions have slowed down, especially at the micro level, people are no longer spending, even if they manage to get the new Naira notes they just hold on to it.

“Banks had started to shut their doors permanently as they could not cope with the pressure of their customers seeking to withdraw cash. I am not sure that is how it was meant to be,” he said. #Naira Scarcity Persists after Apex Court Order.