Nigeria’s President Muhammadu Buhari in a national broadcast on Thursday morning directed the Central Bank of Nigeria to release old N200 notes into circulation. “To further ease the supply pressure, particularly on citizens, I have given approval to the CBN that the old N200 bank notes be released back into circulation and it should also be allowed to circulate as legal tender with the new N200, N500 and N1,000 bank notes for 60 days from February 10, 2023 to April 10, 2023 when the old N200 note ceases to be legal tender,” the President said.
It’s an important yet curious concession from Nigeria’s President after a surprising and unexpected decision to redesign the Naira in December 2022. The redesign process, which included a currency swap, has been riddled with uncertainty. With the CBN unable to meet the demand for new notes, the policy has also led to long queues at bank ATMs and a cash crisis.
CBN moves deadlines twice
At the announcement of the currency redesign program, the CBN announced a currency swap, asking people to deposit their old Naira notes for new ones. This detail was important because the CBN stated that all old notes would cease to be legal tender by January 31, 2023. At a press conference, Godwin Emefiele insisted that the deadline would not change.
However, it appeared that the CBN underestimated the cash demand, leading to a horde of frustrated customers at banking halls who couldn’t access their monies. Eventually the CBN extended the deadline to February 10. Yet, that has produced little resolution; TechCabal reported on Tuesday that banks were no longer accepting the old notes from customers even as the newer notes were not available. It paints the picture of a policy that’s in sixes and sevens.
Only the old N200 notes will be back in circulation
Last week, state governments took the Federal Government to court after protests broke out across a few states in Nigeria. The Supreme Court decided that the Federal Government should put a hold on the policy deadline until February 15, throwing even more uncertainty into the mix. While many argued that the CBN was not a party to the case and wouldn’t obey the rules, Buhari’s decision suggests that the decision to redesign the Naira came from above.
In what was a compromise, the government will now release old N200 notes into circulation and will allow them to remain legal tender for the next 60 days. Old N500 and N1000 notes will no longer serve as legal tender; instead, those notes can still be exchanged per new guidelines from the CBN. It is unclear if the release of old N200 notes will meet the existing demand for cash.