Nigerian President Muhammadu Buhari delayed a plan to outlaw some old high-value banknotes to April 10 as the West African nation struggles with a shortage of cash.
The central bank in October announced that it would redesign 200-, 500- and 1,000 naira notes in a bid to mop up excess cash and rein in inflation. That led to a severe shortage of bills and divided the ruling All Progressives Congress, with its presidential candidate, Bola Ahmed Tinubu saying the policy will damage the party’s chances in presidential and legislative elections scheduled for Feb. 25.
Buhari said on Thursday that old 200 naira notes will be released back into circulation and Nigerians will have 60 more days from Feb. 10 — the central bank’s previous deadline — to return the currency to banks.
“All existing old 1,000 naira and 500 naira notes remain redeemable” at the central bank and “designated points,” he said in a televised speech to the nation Thursday, without providing further details. The exercise has led to the return of 2.1 trillion naira ($4.6 billion) of notes previously outside the banking system, Buhari said. “This represents about 80% of such funds,” he said.
Buhari’s announcement came after at least 10 state governors from his party sued the government in the Supreme Court. The apex court granted an injunction last week that barred the withdrawal of all three notes until it hears the case. The judges adjourned the matter on Wednesday until Feb. 22. The governors are asking the court to rule the demonetization drive unlawful and suspend the process. They have said the injunction remains in force.
Spokesmen for Buhari, Attorney General Abubakar Malami and the Central Bank of Nigeria didn’t respond to questions about whether they considered the current 500- and 1,000 naira notes to be illegal. Buhari said that his administration “respects the rule of law” and was aware of the legal challenge.
The plan to only focus on the 200 naira note was criticized by some members of the ruling party during discussions on Wednesday.
The administration of Nasir el-Rufai, the governor of Kaduna state – one of the parties suing Buhari’s government — said in a statement on Wednesday that the proposal was not “serious” and “would not be sufficient to relieve the widespread human suffering” caused by the cash crunch.
Picking a new deadline “without first assuring that sufficient new notes would have been printed and circulated” is a “non-starter,” the Kaduna government said.
The move to limit cash has severely disrupted everyday life throughout Africa’s most-populous nation, where only 60% of households have access to a bank account, a figure that falls to 41% in rural areas.