The Unending Validity Of Old Naira Notes

The Central Bank of Nigeria (CBN) yesterday announced the extension of the validity of the old banknotes; N200, N500, and N1000 indefinitely.
Prior to yesterday’s announcement, a December 31, 2023 deadline was set for the old design denominations to cease to exist as legal tenders in the country.
The journey started in October 2022 when the CBN introduced the redesign of N200, N500, and N1,000 denominations to be used concurrently with the old naira notes until the old ones were faced out.
This was part of the currency redesign policy of the CBN. “Generally, currency redesign policies (sometimes called demonetization policies) are designed by countries to strengthen the performance of key macroeconomic parameters and equally combat social improprieties.
In Nigeria, the policy was introduced to check the menace of banknotes counterfeiting. It was also intended to reduce inflation and excess cash in circulation.
CBN said, there was a significant hoarding of banknotes by members of the public, with statistics showing that over 85 percent of currency in circulation were outside the vaults of commercial banks.
To be more specific, the apex bank said, as of the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public.
Evidently, it said, currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. “This is a worrisome trend that cannot be allowed to continue”, CBN said.
To change the trend, the bank in line with Sections 19, Subsections a and b of the CBN Act 2007, sought and obtained the approval of the then President, Muhammadu Buhari to redesign, produce, and circulate a new series of banknotes at N100, N200, N500, and N1,000 levels.
As expected, approval was granted, consequently, the apex bank finalized arrangements for the new currency to begin circulation from December 15, 2022.
On November 23, 2022, the then President Muhammadu Buhari unveiled the new naira notes of N200, N500, and N1,000 at the Council Chamber of the Presidential Villa, Abuja.
On the timing of the redesign project, CBN explained that it had even tarried for too long considering that it had to wait 20 years to carry out a redesign, whereas the standard practice globally was for central banks to redesign, produce and circulate new local legal tender every five to eight years.
On January 24, 2023, the CBN announced that the January 31, 2023 deadline set for the submission of old naira notes across the country would stand.
Unfortunately, many could not meet up with the January 31 deadline, therefore, begged for an extension of the deadline. As a result, on January 29, 2023, the bank announced a 10-day extension of the deadline for the submission of old Naira Notes, from January 31, 2023, to February 10, 2023.
However, this was met with stiff opposition. Three aggrieved state Governors of Kaduna, Zamfara, and Kogi approached the Supreme Court and filed a suit to stop the implementation of the policy.
After the hearing, the apex court temporarily banned the implementation of the February 10 deadline of the CBN, making the old N200, N500, and N1,000 notes legal tender.
The Supreme Court later adjourned the case on the naira swap policy to, February 22 for a hearing of the consolidated suits by 10 states, including Kaduna and Kogi states.
The court joined Katsina, Lagos, Cross Rivers, Ogun, Ondo, Ekiti, and Sokoto States as co-plaintiffs in the suit challenging the Naira Redesign policy.
The various state governments had, through their attorneys general, applied to be joined in the suit.
Similarly, the apex court joined Edo and Bayelsa states in support of the Federal Government on the implementation of the naira swap policy.
The six states in their respective motions for joinder joined the three aggrieved states, Kaduna, Zamfara, and Kogi that first filed the suit.
Finally, in March 2023, the Supreme Court extended the validity of old Naira Notes of N200, N500, and N1,000 to December 31, 2023.
The apex Court in its lead judgement read by Justice Emmanuel Akomaye Agim on Thursday, March 3, 2023, said, the policy was an affront to the 1999 Constitution.
The court said, the Federal Government breached the Constitution in issuing directives for the re-designing of the Naira by the Central Bank of Nigeria (CBN).
It further faulted the President for failing to consult the National Council of States, Federal Executive Council (FEC), the National Economic Council (NEC), and other stakeholders before directing the Central Bank of Nigeria to unlawfully introduce new Naira notes.
Consequently, the court extended the validity of the old naira notes to December 31, 2023.
Following the ruling, CBN directed all Deposit Money Banks (DMBs) in the country to recirculate the old N200, N500 and N1,000 banknotes.
The apex bank noted that “in compliance with the established tradition of obedience to court orders and sustenance of the Rule of Law Principle that characterized the government of President Muhammadu Buhari, and by extension, the operations of the Central Bank of Nigeria (CBN), as a regulator, Deposit Money Banks operating in Nigeria have been directed to comply with the Supreme Court judgement of March 3, 2023”.
It said, it met with “the Bankers’ Committee and has directed that the old N200, N500, and N1000 banknotes remain legal tender alongside the redesigned banknotes till December 31, 2023.
“Consequently, all concerned are directed to conform accordingly”, it said.
Meanwhile, yesterday, CBN made a redecision on the December 31 deadline set for the usage of the old naira notes as legal tender in the country.
CBN said, the Old N200, N500, and N1000 would continue to remain legal tender forever, even beyond the initial December 31, 2023, deadline.
The Director, Corporate Communications, CBN, Dr. Isa AbdulMumin who disclosed the development in a statement on Tuesday said, the decision was in line with international best practices and to forestall a repeat of earlier experiences.
He noted that all banknotes issued by the Central Bank of Nigeria (CBN), in accordance with Section 20(5) of the CBN Act 2007, will continue to remain legal tender, ad infinitum, even beyond the initial December 31, 2023, deadline.
Dr. AbdulMumin said, the Central Bank of Nigeria was working with the relevant authorities to vacate the subsisting court ruling on the same subject.
He said, “accordingly, all CBN branches across the country would continue to issue and accept all denominations of Nigerian banknotes, old and redesigned, to and from deposit money banks (DMBs).
“The general public is enjoined to continue to accept all Naira banknotes (old or redesigned) for day-to-day transactions and handle these banknotes with utmost care, to safeguard and protect the lifecycle of the banknotes.
“Also, the general public is encouraged to embrace alternative modes of payment, e-channels, for day-to-day transactions”, he said.