Nigeria’s Supreme Court has temporarily postponed Friday’s deadline for the country to stop using old banknotes, which had caused a cash crisis.
Banks have not been issuing enough of the new naira notes, resulting in desperate and chaotic scenes as people attempted to obtain them.
ATM fights, protests, and mob attacks on commercial banks occurred.
Because many Nigerians do not have bank accounts, the chaos has raised fears that it will disrupt this month’s elections.
According to the head of the election commission, some election service providers will have to be paid in cash, which could be difficult.
The Supreme Court ruling was welcomed by a spokesperson for Bola Tinubu’s presidential campaign for the ruling APC. “Our people have suffered greatly as a result of officials’ incompetence,” said Ajuri Ngelale.
Mr. Ngelale added that the purpose behind the policy was “laudable” but that the lack of cash caused “rightful frustration” resulting in “civil unrest”.
Mr. Tinubu claimed that powerful forces were deliberately making cash scarce in order to undermine his chances of victory.
The policy was supported in principle by Atiku Abubakar of the main opposition PDP, but he said it was poorly implemented.
While Peter Obi of the Labour Party urged Nigerians to be patient, claiming that the reforms would be beneficial in the long run.
According to some observers, the lack of access to cash may make it more difficult for candidates to bribe voters, which is a common practice in the country.
Meanwhile, the Supreme Court’s decision brought relief to Lagos.
“It’s the best option. It will make life easier for us. Because the pressure is too great, they must release all old and new naira notes “Saka Akin, 39, stated.
However, while the ruling relieves the pressure of the Friday deadline, it may not immediately help those in need of cash.
According to Paul Alaje, an economist at SPM Professionals, the decision will only benefit the wealthy: “[It is] good news for the elite who can now spend the old notes they’ve been hoarding.”
Mr. Alaje added that only 20% of the old notes are still in circulation and that many people in rural areas will be unaware of the ruling and will continue to avoid the old notes.
Rosemary, a 22-year-old Lagos resident, agreed. “It irritates me. We haven’t even seen the new notes yet. I now have 7,000 nairas in my possession “She stated. “What should I do if people still refuse to collect it from me? We should just stick with the old ones.”
Why were the new notes introduced?
The Central Bank stated that the currency redesign and replacement policy, announced in October, would aid in combating inflation, which is currently running at around 21%, by reducing the amount of cash in circulation. It went on to say that 80% of the notes currently in circulation were held outside of financial institutions.
It stated that the new notes would be more difficult to forge and that it would limit withdrawals in order to promote a cashless society.
The deadline to stop using old naira notes was originally set for January 31, but it was pushed back to February 10 to give banks more time to transition to the new notes.
The Supreme Court decision follows a legal challenge launched earlier this month by the APC-run northern states of Kaduna, Kogi, and Zamfara.
Their lawyers argued that the government’s policy had led to an “excruciating situation that is almost leading to anarchy in the land”.
The case has been rescheduled for February 15th.
What went wrong?
It was initially assumed that the cash shortage was caused by the banking authorities’ failure to issue enough new notes.
However, the Economic and Financial Crimes Commission (EFCC), the country’s anti-fraud agency, recently shared information about raids in which officers allegedly arrested bank managers for allegedly hoarding the new notes in vaults rather than putting them in ATMs and giving them to customers.
APC governors met with President Buhari last week and urged him to reconsider the policy. Mr. Buhari, on the other hand, reiterated the deadline, promising that the government would do “everything” to resolve the issues.
It is estimated that approximately 40% of Nigeria’s adult population, particularly those living in rural areas, do not have a bank account.
