Nigeria’s Supreme Court ruled on Friday that the country’s three largest banknotes will remain legal tender until Dec. 31 this year, overruling a redesign policy imposed by the central bank that upended daily life in Africa’s largest economy.
The top court said the federal government acted against the constitution by implementing the swap without wide consultation, local television broadcasters reported.
Nasir El-Rufai, governor of the northern Kaduna state who challenged the redesign in court with 15 other states, said a breakdown in negotiations with the government necessitated the suit.
The court said old and new naira notes will be in circulation together, according to reports.
The ruling, if accepted by President Muhammadu Buhari and implemented, should restore some calm to Nigeria where a month-long cash shortage sparked chaos at banking halls and violent protests in some cities in the build up to a closely contested presidential election last week.
Nigeria’s central bank introduced new designs for the 200, 500, and 1000 naira notes in November and gave a six-week deadline for customers to return old notes to banks and access the new ones.
Approved by Buhari, the policy was officially explained as a means to return excess cash from private vaults into the banking system, and combat a kidnapping scourge enabled by ransom payments in cash. But the timing, weeks before crucial elections, led many to believe it was aimed against vote buying by cash.
The policy sparked a widespread cash shortage in Nigeria because the new notes were scarce and old ones became obsolete. The shortage disrupted commerce in Africa’s largest economy where cash is the predominant mode of payment, especially for daily needs like riding the bus and buying food items in local markets.
Governors of three northern Nigerian states — all members of Buhari’s ruling All Progressives Congress (APC) party — asked the Supreme Court to nullify the policy on Feb. 3. The court gave a provisional ruling five days later that the old notes remained usable until the case was decided, but Buhari directed the central bank to reissue only the old 200 naira until April 10. Many lawyers and analysts interpreted the move as an affront to the court’s order.
Buhari has served two terms as Nigeria’s president and is due to hand over to Bola Tinubu, also of his party, who was declared winner of the Feb. 25 elections. But opposition candidates Atiku Abubakar and Peter Obi say they will challenge the result in court.
“It is not in doubt that the president refused to comply with the order of the court that the old 200, 500, and 1,000 naira notes should continue to be legal tender,” Emmanuel Agim, a justice on the seven-member Supreme Court panel, said in the court’s March 3 ruling. “Disobedience of order of court shows the country’s democracy a mere pretension and now replaced by autocracy.”