The federal government Wednesday filed a preliminary objection challenging the application by Kaduna, Zamfara and Kogi states against the implementation of the February 10 currency swap deadline.
In the objection filed by Mahmud Magaji (SAN), the federal government argued that the suit ought not to have been brought before the Supreme Court as the reliefs sought were against an agency of the federal government, the CBN on its powers to withdraw old banknotes and introduce new ones under the CBN Act, 2007.
The federal government argued that the Federal High Court had the proper jurisdiction to entertain such suits under Section 251(1)(a)(p)(q) & (r) of the Constitution (exclusive jurisdiction of the Federal High Court).
While contending that the action before the apex court constituted an abuse of judicial process, the federal government said the state governments have no locus standi and reasonable cause of action to warrant the “invocation of the original jurisdiction of this honourable court.”
Before the objection by the federal government, the Supreme Court earlier yesterday ordered the CBN to allow the use of the old N1000, N500 and N200 notes beyond February 10 and fixed February 15 to hear the case.
A seven-member panel of justices presided by Justice John Inyang Okoro made the restraining order in a unanimous ruling.
Arguing the motion, counsel to the governors of Kaduna, Kogi and Zamfara states, Abdulhakeem Mustapha (SAN) said the matter was important and had come with an affidavit of urgency.
But Magaji Mahmud (SAN), who announced appearance for the Attorney-General of the Federation, was not heard by the apex court being an ex parte motion.
It is just an order not a judgment- Presidency Source
Reacting to the Supreme Court order, a source in the Presidency said: “Generally speaking, it is not a judgment, it is just an order. An ex-parte order is a constitutional leverage specifically given to judges to make an order in exceptional circumstances granting the request of an applicant in a suit in the interim without hearing from the other party.
“The order is only temporary. The judge will hold a full hearing within a short period of time,” he said. Millions of Nigerians have been thrown into confusion following the mopping up of over 1.7trillion old naira notes and the glaring unavailability of the redesigned notes.
The development had led to endless queues in banking halls and ATMs as well as demonstrations in parts of the country.
Extend time – IMF
Lending its voice, the IMF said the CBN should consider extending the February 10 deadline for the swapping of old naira.
The Fund in a statement on Wednesday cited disruptions in trade and payments resulting from the exercise.
“In light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline,” Ari Aisen, the Fund’s Resident Representative to Nigeria, said.
Buhari receives Emefiele, Malami
President Muhammadu Buhari yesterday met with the CBN governor, Godwin Emefiele as well as the Attorney General of the Federation and Minister of Justice, Abubakar Malami at the Presidential Villa, Abuja.
The meeting was held a few hours after the Supreme Court had restrained the federal government from enforcing the deadline of old naira notes.
Daily Trust findings revealed that Emefiele had met with Malami twice on Tuesday ahead of the Supreme Court judgment.
Tinubu/Shettima Campaign Council hails S/Court
The presidential candidate of the ruling All Progressives Congress (APC), Bola Ahmed Tinubu has hailed state governors for standing on the side of the Nigerian people over the CBN new naira policy.
Tinubu in a statement by Bayo Onanuga, the Director, Media and Publicity, APC Presidential Campaign Council, said the governors and especially the APC governors who instituted the suit against the CBN and federal government at the Supreme Court acted well on behalf of the hapless Nigerians who have been made to bear the brunt of naira redesign policy that has been “poorly implemented.”
Tinubu, a former governor of Lagos State, said the governors have saved the country from needless political and economic crises and miseries, which have clearly become the unintended consequences of the monetary policy of the apex bank.
Also, Governor Nasir El-Rufai of Kaduna State has urged the residents of the state, particularly traders, to stop taking the old notes to bank for deposit.
The governor also urged the people to continue transactions with the old notes, saying nobody can stop them even as the February 10 deadline approaches.
The governor also promised the traders and the people of the state that nobody in the state will lose his hard earned money because of the naira redesign policy.
El-Rufai in a video clip seen by Daily Trust on Social media, made the comment on Tuesday at a meeting with leaders of traders in the state. He told them to pass the message to others in their state to stop taking their money to banks.
“Stop taking your money to banks because when you deposit nine naira only one naira will be given to you because the notes are scarce.
“The law says if you have old notes with you even if it takes 100 years and you take it to the central bank it will be accepted. So keep your money with you even if it will take you 100 years,” he said.
Experts proffer solution as IMF seeks deadline extension
Economists and financial experts said yesterday that the only way to resolve the financial crisis in the country is to restore normal cash flow to restart the economy and ease the pains millions of Nigerians are going through.
The experts told the Daily Trust that the issues could be resolved when the right thing is done.
The CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, welcomed the restraining order of the Supreme Court on the timeline for the currency swap. He said the action will restore normalcy to economic activities, especially in the distributive trade sector, the informal sector and rural economy.
The CPPE reiterates its position that given the huge population of over 200million, the large informal sector, which accounts for over 40% of the GDP, the large rural economy and the over 30 million unbanked Nigerians, the CBN cash swap model and timeline was greatly flawed.
“It is inappropriate to arbitrarily cut down on currency in circulation without due regard to data, empirical studies and global best practices,” he said.
According to Yusuf, “We affirm our position that N2.6 trillion in circulation is not too much for the Nigerian economy with a GDP of about N250 trillion. Any attempt to arbitrarily cut it will create a crisis.
“It is unacceptable that citizens are denied access to their cash deposited for purposes of cash swap. This could undermine the confidence of the citizens in the banking system and pose a major risk to the financial inclusion objective of the CBN.
“In Nigeria, cash to GDP ratio is less than 1.5%; while cash/money supply ratio is just about 5%. These are some of the best currency ratios globally and a mark of the remarkable progress that has been made in cashless policy drive. Cash to GDP in the United States is about 9%; in the Eurozone it is about 10%.
“This underlines the fact that cash is not the problem of the Nigerian economy or monetary policy effectiveness. CBN Ways and Means financing of over N22 trillion is a much bigger problem for liquidity management.
“It is regrettable that a purely monetary policy management issue has been profoundly politicised as witnessed in the past few weeks. This has obscured fundamental economic conversations,” he said.
Also speaking, an economist, Prof. Uche Uwaleke noted that it will be difficult to quantify how much money is in circulation that will determine if Nigeria’s economy is cashless or not. He, however, said that the CBN should increase supply of the new notes and expand its supply channels.
“If CBN says maximum over the counter withdrawals for a week is N500, 000 for individuals, then it should expand the supply chain for the new notes.
“The micro finance banks and more PoS operators should be involved in the supply chain. Also, the lower denominations should be printed more to ensure that the new notes reach Nigerians, especially traders that carry out their functions,” he said.
On the other hand, he urged the CBN to obey the order of the Supreme Court on the February 10 expiration of old notes.
“All over the world, especially where central banks are independent, the conduct of monetary policy is their exclusive preserve- a responsibility not encumbered by either the executive arm or the Judiciary,” he said.
By Sunday M. Ogwu, Vincent Nwanma, John C. Azu, Muideen Olaniyi, Saawua Terzungwe, Philip S. Clement (Abuja) & Abiodun Alade (Lagos)