The Central Bank of Nigeria has extended the validity of the old naira notes indefinitely, annulling the December 31, 2023 deadline set by the Supreme Court earlier in the year.
The apex bank announced the decision through a circular titled: “CBN To Allow Old Design Naira Banknotes As Legal Tender, Ad Infinitum”, which it shared on Tuesday.
“Please recall that the Central Bank of Nigeria introduced the redesign of N200, N500, and N1,000 denominations in October 2022 and certain deadlines were set for the old design of these denominations to cease as legal tenders.
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“Without prejudice, the Central Bank of Nigeria wishes to inform the general public of its desire to extend the legal tender status deadline of the old design of N200, N500, and N1,000 denominations, ad infinitum. This is in line with international best practices and to forestall a repeat of earlier experiences.
“Thus, all banknotes issued by the Central Bank of Nigeria (CBN), in accordance with Section 20(5) of the CBN Act 2007, will continue to remain legal tender, ad infinitum, even beyond the initial December 31, 2023, deadline. The Central Bank of Nigeria is working with the relevant authorities to vacate the subsisting court ruling on the same subject.”
The CBN added that all its branches across the country will continue to issue and accept all denominations of Nigerian banknotes, old and redesigned, to and from banks.
The apex bank also urged the public to continue to accept all Naira banknotes (old or redesigned) for day-to-day transactions, as well as embrace alternative modes of payments.
CBN To Allow Old Design Naira Banknotes As Legal Tender, Ad Infinitum… https://t.co/ukHSjfXt9v pic.twitter.com/7l9Oita9Am
— Central Bank of Nigeria (@cenbank) November 14, 2023
Story background
In October of last year, the central bank made a noteworthy announcement, revealing that President Muhammadu Buhari had granted authorization for the issuance of new naira notes, set to take effect from December 15, 2022. The redesigned banknotes, specifically the denominations of N200, N500, and N1,000, were slated for production and circulation.
As part of this initiative, the central bank declared that all existing currencies would lose their legal tender status starting from January 2023. Simultaneously, commercial banks were instructed to cease charging fees on cash deposits with immediate effect.
The decision to embark on this currency overhaul was motivated by various factors, including the growing ease and risk of counterfeiting and an exacerbating shortage of clean and fit banknotes in circulation, according to the financial regulatory authority.
However, what unfolded following the implementation of the initiative was unprecedented. The naira redesign which also was initiated to curtail vote-buying and money laundering among other ills, unleashed chaos, crippling economic activities as the new naira notes became scarce amid high demand.
It took several court orders to force the CBN to extend the deadlines, allowing both the new and the old naira notes to co-circulate. The governors of three northern states—Kogi, Kaduna, and Zamfara—took legal action against the federal government, bringing the case to the Supreme Court. They sought to compel the CBN to reverse its policy on the new naira notes, advocating for the coexistence of the new and old notes. The governors argued that the policy had adverse effects on the economy, leading to significant hardships for the Nigerian populace.
In response to the case, the Supreme Court issued a ruling instructing the federal government to suspend the implementation of the February 10 deadline until the case could be thoroughly examined and determined. The court set a date for the resolution of the case on February 15.
However, despite the Supreme Court’s subsequent judgment, barring the central bank from implementing its February 10 deadline for the phasing out of old notes, the financial regulator was adamant. The Supreme Court on March 3 nullified the policy, calling it an affront to the constitution. It therefore set December 31, 2023, as the deadline for phasing out the old notes.