President Muhammadu Buhari has directed the Central Bank of Nigeria (CBN) to extend the use of old N200 notes beyond the earlier February 10 deadline issued for the phasing out of the old N200, N500 and N1,000 notes.
The CBN had late last year, announced the redesign of the above naira notes as part of its monetary policies geared toward the fight against inflation, corruption, terrorism financing and as the general elections draw near – vote-buying.
Buhari gave the directive during his national address on the challenges of implementing the policy on Thursday morning.
“To further ease the supply pressures particularly to our citizens, I have given approval to the CBN that the old N200 bank notes be released back into circulation and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes ceases to be legal tender,” Buhari said.
The central bank fumbled the implementation of the naira redesign policy as scarcity of the new notes stalled circulation, forcing Nigerians to rely largely on the old notes for transactions. The situation, which has significantly affected economic activities, resulted in lawsuits, protests and attacks on commercial banks as cash-strapped Nigerians besieged banks for money.
About 10 states have dragged the federal government to the Supreme Court in a bid to have the policy reversed. Although the apex court had in an ex parte order last week, asked the federal government to allow both the old and new notes to coexist pending the determination of the matter, which has now been adjourned to February 22, the CBN insists that the old notes are no longer a legal tender.
While acknowledging the suffering the policy has brought upon Nigerians, Buhari appealed for their “understanding and patience during this transient phase of implementation.” He said the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative.
“I have been reliably informed that since the commencement of this program, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved,” he said.
Buhari had pointed at excess money in circulation as part of critical points underpinning the naira redesign policy decision. He noted that in 2015, when his administration commenced its first term, Currency-in-Circulation was only N1.4 trillion, but has grown to about 100%, distorting the government’s effort to tame inflation.
“The proportion of currency outside banks grew from 78% in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation,” he said.
The president added that the huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth, an assertion that PwC Nigeria chief economist, Andrew Nevin, described as “absolute economic nonsense.”
Buhari further stated that in addition to assisting the CBN in mopping up excess money in circulation, the new policy has also contributed immensely to the minimization of the influence of money in politics. He urged Nigerians who still have old naira notes to redeem them at the CBN and designated points.
“Considering the health of our economy and the legacy we must bequeath to the next administration and future generations of Nigerians, I admonish every citizen to strive harder to make their deposits by taking advantage of the platforms and windows being provided by the CBN,” he said.
