Chris Eyinnaya is a chartered banker and a fellow of the prestigious Chartered Institute of Nigeria (CIBN). In his well presented article on the 9th March 2023 in the Business Day , he argued that the Supreme Court is no more the Apex court in the land by submitting that there is a higher authority which he called the “Practice of Banking”. For my readers that have missed his piece I represent his arguments in his own words and my reaction to this deliberate reduction of the powers of this apex judicial institution in the land.
According to the distinguished banker, the Supreme Court (SC) judgement of 10 March 2023 ordering the validity of N500 and N1000 notes as legal tender currency up till 31 December 2023 came to us, professional bankers, as a surprise because the SC failed to take a holistic look at the law relating to banking, of which their judgement has become a part in taking such a far-reaching decision that is capable of truncating the Central Bank of Nigeria (CBN) monetary policy which is already being implemented in the current year.
In particular, the policy targets moderation of inflation and encouraging business transactions to be routed through the banking system.
There are two objectives here. First managing inflation and stabilising the economy and encouraging financial inclusions. The inflation in the country is fuelled by the mismanagement of the economy by elites over the years and other factors including the Ukraine Russia crisis. The second objective which is to encourage the use of digital channels must not be done by tactical strangulating the people and the economy. This writer wondered why these Abuja and Lagos based bankers would want to make this government the most unpopular administration by the time it leaves office. Before now a plethora of accusations ranging from corruption to slow reaction to every issue is hanging on their neck why add this avoidable challenge?
Under this administration the insecurity problem has reached new heights and getting worse and one wonders why the relationship between the insecurity problem and the downtown in the economy isn’t apparent to these Apostles of noose tightening economists. The government called for belt tightening and we are cooperating. I think that’s not enough they are demanding for the cutting of the jugular by making it impossible for citizens to access their finances as a strategic route to manage inflation. We don’t understand the goal here. This looks like a political agenda rather than an economic objective. According to spokespersons for the government the cash redesign policy is to remove excess naira from the system and stop vote buying. I guess the government failed on this objective as we saw plenty evidence of vote buying in naira and dollar on social media.
Dear Government, solve insecurity problem and encourage more foreign investment and see what the impact would be.
One is also amazed by Chris Enyinnaya ‘s submission that banking practice by convention overrides banking law. Against that background, the SC judgement extending the validity of N500 and N1000 notes as legal tender up to 31 December 2023 is not enforceable. This is so because there is a gap between banking law and banking practice. He says under s.9(2) Bills of Exchange Act 1990 as amended, “when the sum payable is expressed in words and also in figures and there is a discrepancy between the two, the sum denoted by the words is the amount payable”. But in banking practice such cheques are dishonoured by nonpayment with the reason “Amount In Words And Figures Differs”. Again under s.3(4)(a) Bills of Exchange Act 1990 as amended “A bill is not invalid by reason that it is not dated”. Yet in banking practice, an undated cheque is dishonoured by nonpayment with the reason “Date Required”. This practice may seem naive but one reason for this practice is the practical effect of date on a cheque which fixes the time the drawer of the cheque assumes liability on it. According to him this matter becomes clearer he says in Woods v Martins Bank and Anor.(1959) 1 QB 55. Salmon J at page 70 said “In my judgement, the limits of a banker’s business cannot be laid down as a matter of law. The nature of such a business must in each case be a matter of fact and accordingly cannot be treated as if it were a matter of pure law”. Therefore the business of CBN in currency management cannot be treated as if it were a matter of pure law. These arguments and the citation of these cases make it look like the CBN and Bankers know Governance than the Judges of the court.
The examples provided are way too flimsy to justify the affront the President , the CBN and the Attorney General and Minister of Justice is/are presenting for disobeying the Apex court in the land . According to Rabiu Kwakwanso of the NNPP, the tuxedo wearing elites in the urban centres of Lagos , Abuja and Kaduna are very distant from the realities of the poor villagers in desert of Yobe , the creeks of Nembe or the forest of Ore hence these legal arguments are spurious with political implications far reaching than intended.
Politics is everything, everything is politics
Obama defended the auto market in America when it was possible to look the other way and the Japanese took over the auto market during global economic crisis. Jobs were saved 60,000 created.
The most obvious consequence of the IMF’s involvement in the Suez canal crisis is that it put the IMF on the map as an episodic international lender. For the first time, the IMF had played a significant role in helping countries cope with an international political and economic crisis. Subsequently, it was called upon repeatedly to deal with other shocks to the financial system, notably the sterling crises and the gold pool crisis of the 1960s, the oil shocks of the 1970s, the developing country debt crisis of the 1980s, and the financial crises in Mexico, Russia, and Asia in the 1990s. . Although the IMF also began to lend regularly to help countries cope with the temporary payments effects of economic imbalances, that ongoing activity was quite small in amount relative to the occasional spurts in lending occasioned by financial crises. The Brettonwood institutions have never looked back after . The economy makes the politicians and vice versa.
Bankers must support the polity
Bankers should understand that their practice would be history if law and order breaks down. As strategic intermediary in the financial services sector if the people are pressed to the wall by the gymnastics and technicalities of their banking practice there would be a back lashed by the people. The President, the AG and the Minister of Justice and tuxedo wearing elites in the banking space would be singing a different song. Political stability is necessary for proper banking practice and development.
Michael Umogun is a chartered marketer with interest in public policy.
