Nigeria’s top court ordered the central bank to stop the removal of old high-denomination banknotes that has created an acute cash shortage in Africa’s largest economy — days after a new president was elected.
(Bloomberg) — Nigeria’s top court ordered the central bank to stop the removal of old high-denomination banknotes that has created an acute cash shortage in Africa’s largest economy — days after a new president was elected.
The Supreme Court decided Friday that the Central Bank of Nigeria’s plan to ban the use of old bills by Feb. 10 was unconstitutional. The judges ruled that the notes should remain in circulation until the end of the year, Lagos-based Channels Television reported.
The central bank’s project to replace 200-, 500- and 1,000-naira notes that started on Dec. 15 has disrupted everyday life in Africa’s most populous nation, where only 60% of households have access to a bank account, because of a shortage of new bills.
Snaking queues are now a common sight outside ATMs and bank branches, while common tasks such as riding the bus or buying food have become an ordeal.
Private-sector activity last month contracted for the first time in almost three years as companies reduced output and cut jobs because of the scarcity.
The lawsuit initially brought by the governments of Kaduna, Kogi and Zamfara – all controlled by the ruling All Progressives Congress — has been adjourned several times since it was filed a month ago, most recently on Feb. 22.
At least 10 other states, most of them also run by President Muhammadu Buhari’s party, have joined the suit or filed their own cases, pitching the governors against the outgoing head of state, who backed the policy.
In their initial suit, the three APC governors said their states were “on the verge of anarchy” due to the “untold financial, economic and social hardship” triggered by the central bank’s rushed program.
Buhari on Feb. 16 agreed to allow 200-naira bills to re-enter circulation for two extra months but resisted pressure to extend the deadline for the 500- and 1,000-naira notes beyond Feb. 10.
The governors said this concession was insufficient and censured the president for ignoring an injunction from the court barring the removal of the notes until the resolution of the case.
Backers of APC’s Bola Tinubu, who was declared the winner of Nigeria’s presidential election on March 1, argued before the Feb. 25 vote that disruptions caused by the policy were damaging their electoral prospects. The results of the presidential elections are being contested.
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