Explainer: After CBN’s compliance with Supreme Court ruling, what next?

After more than one week of silence over the Supreme Court’s ruling on naira redesign, the Central Bank of Nigeria (CBN) on Monday announced that the old N200, N500 and N1,000 remain legal tender until December 31, 2023.

This came after the presidency issued a statement on the same day, saying that President Muhammadu Buhari never told the CBN and the Attorney General of the Federation not to obey the order of the apex court.

The Supreme Court had on March 3, 2023 ordered that old N200, N500 and N1000 notes remain valid till December 31, 2023.

The central bank, in a statement on Monday signed by Isa Abdulmumin, its acting director of corporate communications, directed all banks to comply with the Supreme Court’s ruling.

All the analysts who spoke to BusinessDay described the CBN’s compliance as a welcome development, though coming too late.

They were concerned about whether the old naira notes would be in sufficient quantity to ease the pains Nigerians went through as a result of the cash crunch.

Read also: Old naira notes legal tender until Dec 31- CBN

“I believe the CBN took too long to comply. It had no choice but to obey the Supreme Court. The management of the policy has been a disaster, especially the pains that Nigerians are going through. My hope is that more cash goes round so that these pains are relieved quickly,” Tope Fasua, CEO of Global Analytics Consulting Limited, said.

“Apparently, the projections were missed and the statistics being used misled everyone. We cannot withdraw N3 trillion cash and replace it with maybe N400 billion. That shocks the system too hard. The Bank should recalibrate next time,” he added.

For Taiwo Oyedele, head of tax and corporate advisory services at PwC Nigeria, the notice of compliance with the Supreme Court’s judgment by the CBN regarding the validity of all old naira notes as legal tender is a good step, albeit coming quite late and not nearly enough to fully address the scarcity problem.

“The CBN needs to be specific regarding the level of compliance including the total quantity and value of old and new notes it has released into circulation relative to the current demand and an indication of how and when the currency supply gap will be covered to ease the pain on Nigerians and the strain on the economy,” he said.

“My concern is that except a substantial quantity of already withdrawn notes are reinjected and the cash withdrawal limits eased, the cash scarcity is most likely to persist,” said Uche Uwaleke, professor of Capital Market at the Nasarawa State University Keffi.

BusinessDay visited some bank branches across Lagos and found that the banks had not started dispending the old notes over the counter and via Automated Teller Machines.

While some banks were yet to commence payments, customers thronged their premises waiting to withdraw money and do other transactions.

Babajide Sanwo-Olu, governor of Lagos State, has urged businesses in the state to accept the old naira notes.

He said on Twitter: “My dear Lagosians, I have noted the difficulties that you have been having over the naira redesign crisis. I feel your pains. Kindly note that commercial banks have been directed to accept the old N500 and N1,000 notes as deposits and pay them out for withdrawals.

“I urge all businesses in Lagos to accept the old notes as it is legal tender. Anyone rejecting these notes will be heavily sanctioned as we kick off monitoring. If a bank refuses to accept deposits of old notes, please lodge a complaint with Lagos State Consumer Protection Agency.”