Emefiele will make a choice once Buhari returns from Qatar, according to the source Old notes cannot be released because of procedural issues Notwithstanding the Supreme Court's verdict, Nigerians may experience a cash crunch for weeks.
• Augusto & Co warns against the long-term effects of commoditizing the naira.
• Obtaining healthcare and other necessary services is extremely difficult for rural residents.
Lawyers are seriously debating whether the Supreme Court's ruling on the naira redesign strategy is binding on the Central Bank of Nigeria (CBN), which is not a party to the lawsuit. This is due to the CBN's silence over the verdict.
The old naira notes will continue to be valid until December 31 according to a decision made by the Supreme Court on Friday, March 3. By this ruling, the Supreme Court invalidated the Federal Government's directive to utilize only the old N200 notes until April 10.
It's interesting that the CBN, the only organization legally tasked with establishing monetary policy, was not made a party to the lawsuit before the Supreme Court, giving rise to questions about whether the court's ruling could be relied upon by the CBN to ensure compliance.
Terkura Douglas Pepe, a Senior Advocate of Nigeria (SAN), contended that because the apex bank is a federal government body, it must abide with the ruling. He argued that because the Federal Government was a party to the lawsuit, the ruling should also be binding on CBN.
The senior attorney stated that the CBN is recognized under the BOFIA and the CBN Act as an agency of the FG, and that the FG is its sole shareholder.
Mr. Douglas Ogbankwa, also a lawyer, claimed that the ruling is binding, as CBN is an agency of a disclosed principal, which is the FG.
"The CBN is a body corporate created by statutes that acts as the Federal Government's agent in the formation of governmental policies. Any directive made against the Attorney General of the Federation (AGF) is enforceable against any associated body established by written law.
"The AGF is the chief legal official of the federation, and he should take the lead in ensuring that the Supreme Court's decision is obeyed smoothly and quickly. Court rulings must be followed because, like a fish out of water, a society that does not uphold the rule of law will perish.
"The law is both for the governed and the government, and it is in the interest of the government to obey court decisions as it is typically the final victim in a condition of breakdown of law and order," he claimed.
Additionally, in his opinion, CBN is obligated by the ruling despite not being a party to the lawsuit, according to Abuja-based attorney Maliki Sylvanus.
However, he clarified that such a binding decision is based on the inclusionary principle because it is a legal concept that no party should be bound by a court decision in which that party was not heard.
According to him, no court of law has the authority to rule in favor of or against a party who is not in front of it by way of an order. The constitutionally guaranteed idea of a fair hearing serves as the foundation for this legal position.
Yet Sylvanus emphasized that the supreme court has the authority to issue a ruling against someone who is not a party to the case.
On the assumption that it was not a party to the case before the top court, CBN is bound by its ruling regarding the redesign of the naira. According to this legal principle, court injunctions are typically granted to enjoin parties who are not present in court from interfering with the privies of those parties.
But fellow attorney Kenechukwu Maduka holds a different viewpoint. According to him, the enforceability of a lawsuit is greatly impacted by a party's failure to join the action. He insists that this person must be a party to the action in order for the judgment to be binding on them.
"Taking into account the pertinent laws, particularly section 1(2) of the CBN Act, CBN is an independent body with its own set of legal statutes.
"CBN does not lose its legal personality because FG is its principal. According to him, CBN has the legal ability and right to sue and be sued on its own behalf under the law as an agency of the FG.
However, Maduka asserted that because the Supreme Court, the highest court in the land, has decided the matter, it has no choice but to follow its ruling.
As a result of procedural issues, the speedy recirculation of old N500 and N1,000 notes still kept in CBN vaults throughout the nation is in jeopardy. As a result, Nigerians may have to endure the cash crunch a little longer.
Reliable sources indicated that the higher and most popular denominations would likely take the same course as mopped N200 notes, which were rarely or never released by the apex bank despite President Buhari's approval for their re-circulation following intense political horse-trading over the matter.
In that case, Nigerians would be forced to trade with the few notes that those who failed to meet the deadline held. The reporter has reliable information that much of the money the apex bank collected has not yet been destroyed.
Cash destruction typically takes place in front of security personnel at various regional headquarters across the nation. Regarding the situation with the old notes, CBN has been mum.
Godwin Emefiele, the governor of the Central Bank of Nigeria, won't make any statements until President Buhari returns from Qatar, according to The reporter, which convened in Abuja last night.
According to a source, the CBN governor will typically wait for further instructions from the President on how to proceed after winning the President's support for his position.
When questioned further about why, given the gravity of the situation, the governor could not call the President, the source responded, "How can the governor pick up his phone and call Mr. President on a matter like this? That will seem unprofessional. The governor is an African gentleman and a man of protocol.
He won't act in such a way.
"However, if the President calls him and provides specific instructions on how to proceed, that is a different matter. A political solution is required given the current state of the situation. Political parties, governors, and other interests are all involved in this issue. The more complicated it could be, the longer it goes unresolved.
Sources claim that the Supreme Court's ruling does not take into account the process of recirculating currency that was originally packaged for disposal.
They claimed that before planning a distribution, the apex bank would need to audit the available cash, separate the damaged note, and sort the remaining funds.
The reporter was informed that the first step has yet to be taken, despite the fact that the procedure, according to sources, could take at least a week.
Opinions about whether the CBN would prefer to go through the difficult process of reintroducing money that might be mixed with worn-out notes rather than focusing on expanding the circulation of the new notes are divided within the regulatory institution.
"This year will see the gradual phase-out of the old banknotes. It makes sense to question whether the stress is worth it when you take into account the time and expense of digging up the old notes. Why not print more of the new naira, someone might ask. Though it won't be an easy choice, the decision will be made eventually.
It was revealed that the cash audit might identify some banks who over-declared in the most recent rush to meet the deadline.
Stanley Ukeje, a former assistant director at the CBN, confirmed that banks are required to inform the CBN of the value of each box delivered. Considering that CBN officials would hardly have the time to confirm the declared amount, he continued, fraudulent declarations should be expected.
"If a box is marked N400 million, there may not be an incentive to confirm. Additionally, banks are aware that the CBN may not be eager to confirm the value. That might raise the cost of the exercise, which would inevitably encourage fraud, according to Ukeje.
Before deciding on recirculation, the apex would need to confirm the actual value of each box of cash kept at regional and branch offices, a source familiar with CBN's procedure told The reporter.
Before a decision is made regarding what will happen to money that has been stored, the source added that banks that are found wanting could face harsh sanctions.
prior to yesterday, The reporter found out that no firm decision had been made regarding whether recirculation is feasible and how the procedure would get underway. Although the CBN has chosen to remain silent on the subject, those who are not authorized to speak were waiting for a situation report from the currency division.
Nigerians who are struggling to get their lives started but need money to do so flocked to various banks to demand access to their savings. Most people could only receive the platitude "there is no cash yet" from their bankers, who also bear the brunt of the failed naira redesign.
The head of an old bank's operation told our correspondent that the court decision "cannot perform any magic" in the same way that the President's order to continue using N200 could not. She disclosed that the majority of banks had given back the deposited money to the regulator and could only pay customers after the latter released the money it had been holding in reserve.
"Even though we live in the same nation, we only offer intermediation services. Money isn't created by us. people when
People across the nation are still lamenting the lack of money. The once-relieving point-of-sale operators in Lagos and some other cities are currently unable to help because they are out of money. Where available, people pay up to a 30% premium to obtain cash.
The worst communities are those in rural areas. One week has passed since they last touched money, according to those who spoke with the reporter. Some rural residents pay as much as N2,500 to "purchase" N5,000.
"I'd rather go without money than hand over someone else's hard-earned N5,000 in exchange for N10,000. This is unimaginable, said ThankGod Bernard, an employee of the local government in Edo State, to the reporter.
According to reports, some banks allegedly paid out old notes yesterday despite the regulator's continued silence. The claims couldn't be independently verified by the reporter. In Lagos, there were a few automated teller machines (ATMs) that dispensed cash, and they were packed with hundreds of users.
Tallies at these ATMs are provided as early as 6:00am, long before bank employees arrive. The number-assigning process is tainted by animosity and all kinds of mischief.
Agusto & Co, the top rating agency in Nigeria, has warned of the increasing hardship by warning that cash-based businesses are in danger of failing even as rural residents' standards of living decline.
The company criticized the execution in its report, "Redesign Gone Wrong? - Costly Cashless," noting that the rating is below average and that the sensitization efforts were insufficient.
"In our opinion, the CBN fell short in its efforts to effectively sensitize the public—particularly rural residents—and manage expectations through the media (television, radio, newspapers, and new media). Most Nigerians believed that exchanging old Naira notes for new ones was an easy process.
"However, if the Kaduna State governor Nasir el-Rufai is to be believed, the CBN only printed about N400 billion in new notes, leaving a shortfall of N2.3 trillion.
Therefore, even though it has been reported that the exercise has so far brought in 80% (N2.1 trillion) of the N2.7 trillion held outside of the banking system, the typical Nigerian is once more put to the test of their resiliency. Cash has become commoditized, is being hoarded by many people, and is now selling for outrageous premiums at point-of-sale (PoS) outlets of up to 20-30%.
