All you need to know about the Naira redesign policy and CBN’s promise to sanction PoS operators

Godfrey Elimian
CBN Governor expresses concerns about rising inflation, which he ascribed to insecurity, election spending, and the impact of the global market on the economy.
CBN vows to deal with POS operators charging more than stipulated charges
CBN selects 5 banks for cash swap program, bars POS agents in Lagos and Abuja

In the wake of continuous hardship suffered by Nigerians at the hands of point of sale (PoS) agents in the country, the Central Bank of Nigeria (CBN) has vowed to prosecute POS operators who take exorbitant charges on transactions.

Cash has been scarce since the naira redesign policy was implemented, and there have been long queues at Banks and ATMs in the country. The few POS operators who have cash have disbursed it with increased charges, leading to more inconvenience for Nigerians.

It is still unclear how the CBN Governor intends to prosecute the POS operators who overcharge. However, Godwin Emefiele said some elements in the country needed not to play on the already existing hardships being faced in the country.

In a Tuesday meeting with members of the diplomatic corps, the CBN boss admitted the shortcomings and inconveniences caused by the naira redesign policy, including hoarding and increased agitation.

The CBN governor insinuated that some political figures could be using the situation in the country to spread panic, which is uncalled for. He reaffirmed the positives of the redesigned naira, claiming that it has helped to control inflation and is causing a moderation in exchange rates.

All you need to know about CBN naira redesign policy and its promise to sanction PoS Operators
New Naira notes

Mr Emefiele also urged Nigerians and members of the diplomatic community to support the policy. He noted that while the transition to embracing the new naira notes may be challenging, its benefits are enormous and will lead to a cashless policy.

The CBN Governor was adamant about the February 10th deadline, which he reiterated cannot be changed contrary to the Supreme Court’s judgement. Last Wednesday, the Supreme Court restrained the Federal Government and the Central Bank of Nigeria from implementing the February 10 expiration deadline of the old 200, 500 and 1000 naira notes.

In addressing the diplomatic corps on the state of the country’s economy, he expressed concerns about rising inflation, which he ascribed to insecurity, election spending, and the impact of the global market on the economy.

Nigeria’s Cashless Policy Drive: CBN Introduces Charges on Cash Deposits and Withdrawal Above 500,000
Governor of the Central Bank of Nigeria, Godwin Emefiele…

He estimated the country’s growth rate for 2023 to be 3.6%, saying that the economy will develop at a “subdued rate” as a result of a lack of petroleum products, increased expenditure that is being limited, and rising debt levels.

Although we have made certain efforts to get through to authorities in the CBN, that effort has not yielded.

Read also: Cash swap programme: CBN chooses 5 banks, bars Abuja, Lagos PoS operators

The Naira redesign and the aftermath

The cash scarcity and the ensuing economic and social disruptions brought on by the Central Bank of Nigeria’s (CBN) currency redesign policy have exposed numerous design and implementation problems that often reduce the efficacy of governmental initiatives.

President Muhammadu Buhari launched the new Naira banknotes last year, expressing delight that the redesigned currencies are locally produced by the Nigerian Security Printing and Minting (NSPM) PLC.

All you need to know about CBN naira redesign policy and its promise to sanction PoS Operators

While commending the CBN and its Governor for the redesign policy, the President acknowledged that international best practice requires central banks and national authorities to issue new or redesigned currency notes every 5 to 8 years. However, it is almost 20 years since the last major redesign of the country’s local currency was done.

Speaking at the launch of the new banknotes, which preceded the Federal Executive Council (FEC) meeting, the president explained in detail the basis for his approval to the Central Bank of Nigeria (CBN) to redesign the ₦‎200, ₦‎500 and ₦‎1000 banknotes.

‘‘There was an urgent need to take control of currency in circulation and to address the hoarding of Naira banknotes outside the banking system, the shortage of clean and fit banknotes in circulation, and the increase in counterfeiting of high-denomination Naira banknotes. It is on this basis that I gave my approval for the redesign of the ₦‎200, ₦‎500 and ₦‎1000 banknotes.”

Presidnet Muhammadu Buhari

According to the President, ‘‘the new Naira banknotes have been fortified with security features that make them difficult to counterfeit.’’ When we did our research, we found five main objectives behind the CBN redesigning the new naira notes.

They are: Curb Inflation, Reduce Terrorism, Stop Vote Buying, Increase Financial inclusion and Reduce Counterfeiting.

Since then, the CBN has come out to roll out deadlines for using the notes by Nigerians. Initially, the apex bank fixed January 31st as the deadline for the old notes to be withdrawn from the economy and, consequently, for Banks to receive them.

But the deadline was later extended to February 10 by the Governor, having been pressured by institutions like the Senate and House of Representatives. Also, the economic environment that ensued from the policy meant Nigerians were beginning to face difficulties in accessing these new naira notes made available to the banks by the CBN.

Nigerians and POS agents expressed these difficulties to our respondents on the field, who went out to ascertain how they were coping during these times and meeting the excessive demand for cash.

YouTube player

In response, the CBN Governor released a statement concerning the commercial banks’ acceptance of old Niara notes. he mandated commercial banks to accept the old notes from Nigerians beyond the February 10 deadline.

Mr Emefiele announced this on Tuesday while appearing before the House of Representatives ad hoc committee looking into implementing the policy. The CBN Governor said he agrees with section 20(3) of the CBN Act, which provides that commercial banks must accept old notes after a deadline.

Section 20 (3) of the Act says: “Notwithstanding Sub-sections (1) and (2) of this section, the Bank shall have power, if directed to do so by the President and after giving reasonable notice on that behalf, to call in any of its notes or coins on payment of the face value thereof and any note or coin with respect to which a notice has been given under this Sub-section, shall, on the expiration of the notice, cease to be legal tender, but, subject to section 22 of this Act, shall be redeemed by the Bank upon demand.”

Although Mr Emefiele had on Sunday announced a “grace period” till the 17th of February for the Nigerians to deposit the money, the lawmakers insist that it must be months, not days.

Read also: CBN extends old Naira notes use till February 10

Supreme Court Intervention

Last week, the Supreme Court of Nigeria entered an interim order against the Central Bank of Nigeria, banning the Bank from going ahead with its February 10 deadline for the end of the use of the old naira note until February 15, 2023 when a hearing would take place.

Supreme court suspends old naira withdrawal

This was after three state governors — from Kaduna, Kogi and Zamfara in the north of the country —  all belonging to the ruling party sued the federal government, seeking to suspend the central bank’s plan that has caused a cash crisis and disrupted transactions in Africa’s largest economy. 

The governors asked the court to immediately suspend the exercise until the government “complies with relevant provisions of the law,”

This order was granted Ex-Parte, which means the Supreme Court did not hear from the Central Bank or an agent of the federal government. The court restrained the bank from going ahead with its policy ending the use of the old notes as of February 10, 2023. 

Governors of Kogi and Kaduna states

However, Dr Sam Amadi, former Chairman of the Nigerian Electricity Regulatory Commission (NERC), in a position paper, argued that the power of the Supreme Court does not require it to take over technical decision-making from the designated decision-maker, especially when the subject matter requires insulation from politics and is not judicially manageable like that of the CBN.

His further statement reads:

“The issue borders on the exercise of regulatory power over currency, an issue within the federal government’s exclusive jurisdiction under the 2nd Schedule to Part 2 of the Constitution.

“By virtue of Section 251 of the Constitution, the proper court to exercise jurisdiction over the matter of currency between the agent of the federal government and any person or entity is the Federal High Court, not the Supreme Court. As long as the matter is on a currency policy by the federal government, the proper venue for adjudication is the Federal High Court, not the Supreme Court,”

Notwithstanding, after the CBN Governor’s stance yesterday on the deadline for the expiration of the old naira notes, spokesperson to the President, Garba Shehu, said The federal government is yet to decide on an extension of the deadline for the use of old naira notes, in a statement made available to Journalists.

“We wish to state that it is not true that the Federal Government or the Central Bank of Nigeria, CBN have taken a preemptive action on the legality of currency as a legal tender in view of the pendency of the case before the Supreme Court. The position of the government and the CBN will be made known upon the determination of the suit coming up tomorrow (today).

The statement reads
Supreme court adjourns hearing on Naiara redesign

Suit Adjourned

Earlier, we reported that the suit asking the Supreme Court had adjourned the hearing of the case brought against the Central Bank of Nigeria (CBN) on the naira redesign policy to Wednesday, February 22.

At the court session on Wednesday, Lagos, Katsina, Cross-River, Ogun, Ekiti, Ondo, and Sokoto states were represented in court and sought to be joined as co-plaintiffs in the suit. Bayelsa and Edo’ states also sought to be joined as respondents.

Shortly before adjourning the matter, Abdulhakeem Mustapha, who represented Kaduna, Kogi, and Zamfara, prayed to the court to make an order directing the federal government to implement a deadline on the old notes.

However, a seven-member apex court panel led by John Okoro said the interim court order delivered on February 8 is still binding, pending when the substantive suit is heard.

“The interim order is pending the hearing on the motion on notice,” Okoro said.

This news further sends Nigerians into a state of confusion and torment currently encountered by commercial banks and POS agents that continually exploit them all to withdraw their hard-earned cash.

Speaking to an individual earlier about the matter who wishes to have his name withheld, he claims that as of today, “banks are no longer accepting the old naira notes as well as commercial bus drivers.” The respondent was forced to return home after trying to get on a bus to work.

Another respondent who introduced himself as just Rico claims the same applied to him:

“I was unable to get new naira notes today because there was nowhere to withdraw money from, and the keke riders said banks are no longer accepting the old notes because of the statement of the CBN Governor.”

It remains to be seen what the Federal; Government would do about the lack of cash situation currently being experienced by every Nigerian. Also, the CBN has not said anything yet, but much is to be anticipated from the decision of the Supreme Court on the adjourned date if it materialises.

Read also: JUST IN: Nigerians made to wait as Supreme court adjourns case on Naira redesign till Feb 22

Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!

Register for Technext Coinference 2023, the Largest blockchain and DeFi Gathering in Africa.

Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!