CBN Demonetisation Policy: NBA Calls On CBN To Sensitize Nigerians On Its Obligation To Redeem Old Notes Upon Demand, After 31st January 2023
The Nigerian Bar Association has urged the Central Bank of Nigeria to embark on a sensitisation campaign which will adequately explain to Nigerians, especially those in rural communities what will happen to old bank notes which cannot be swapped by the 31st of January 2023.
This was contained in a letter signed by the NBA President, Yakubu Chonoko Maikyau, OON, SAN to the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, CON which was dated 23 January, 2023 and sighted by The Metro Lawyer (TML).
Recall that the Central Bank of Nigeria, had on the 26th of October 2022, announced a demonetisation policy for a redesign of the three highest denominations of Naira notes (200, 500 and 1000) and a withdrawal of the old notes which would cease to be legal tender by the 31st of January 2023. The Central Bank gave the reason for the policy as among others, to “help increase financial inclusion, control inflation and assist in the fight against corruption.”
Maikyau, in his letter to Emefiele lauded the policy as it has potential for immense benefits if it is properly and fully implemented; some of these benefits are stemming corruption, limit vote buying in the coming elections and easy detection of terrorism funding and other criminal activities. Maikyau however expressed concern “… as to whether the implementation of the policy in the manner that it is being carried out will not bring more loss, stifle economic activities, cause panic and generally result in more hardship to the same Nigerians the policy is meant to serve.”
Being a matter of public interest and of general interest to members of the legal profession who occupy a privileged position in the society, Maikyau stated that the NBA had followed the steps which the CBN had taken so far in the implementation of the policy and had held consultative engagements with individuals and groups (stakeholders) to request their opinions on the policy.
While reviewing some findings on past attempts at demonetisation within and outside Nigeria, Maikyau identified some challenges which the policy may face, based on these findings; and also listed a number of stakeholder recommendations for the success of the policy.
In pushing for a review of the implementation of the laudable demonetisation policy of the Central Bank of Nigeria, the NBA President called on the CBN, “… to adhere strictly to the spirit and intent of the law…”, in order not to stifle economic activities or cause harm, loss and injury to Nigerians, in the aftermath of the implementation of the policy.
For clarity, S. 20 of the CBN Act 2007 provides as follows:
20. (1) The currency notes issued by the Bank shall be legal tender in Nigeria at their face value for the payment of any amount.
(2) the coins issued by the Bank shall, if such coins have not been tampered with, be legal tender in Nigeria at their face value up to such amount or amounts as may be determined, from time to time, by the Bank.
(3) Notwithstanding sub-sections (1) and (2) of this section, the Bank shall have power , if directed to do so by the President and after giving reasonable notice in that behalf, to call in any of its notes or coins on payment of the face value thereof and any note or coin with respect to which a notice has been given under this sub-section, shall, on the expiration of the notice, cease to be legal tender, but, subject to section 22 of this Act, shall be redeemed by the Bank upon demand.
(4) It shall be an offence punishable by a term of imprisonment of not less than 5 years for any person to falsify, make or counterfeit any bank note or coin issued by the Bank which is legal tender in Nigeria.
(5) A person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine fine of N50,000 or 6 months imprisonment:
Provided that the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as medium of exchange in Nigeria.
Based on the above provision of the CBN Act, the NBA President’s letter queried, “Was there a directive of the President? And where there was one, could it be said that the notice, given the prevailing circumstances was reasonable?”
Citing the provisions of S. 20 of the CBN Act (2007), Mr Maikyau observed, “There seems not to be any information in the public domain as to what would happen to the old currency in the possession of Nigerians, by or after 31 January 2023. Section 20 (3) quoted above requires that:
…any note or coin with respect to which a notice has been given under this Sub-section, shall, on the expiration of the notice, cease to be legal tender, but, subject to section 22 of this Act, shall be redeemed by the Bank upon demand. [underlined for emphasis]
“The “Bank” indicated above being the CBN, we wish to note at this point that there is no sensitisation, or if there is, it is not widespread, as to what Nigerians can do with the old bank notes after the 31 January 2023 even though the law has made clear provisions for what shall be done by the CBN upon demand. Any person who shall be in possession of the old notes which have ceased to be legal tender by 31 January 2023 is at liberty to approach the CBN and make a demand for the redemption of the notes and the CBN is under statutory obligation to “redeem” the notes.”
He therefore called on the CBN to embark on a massive campaign to inform Nigerians that by law, even though no more legal tender, their old notes can still be swapped at any of the Bank’s 36 branches across the country, beyond the 31 January 2023 deadline.
This, the NBA President stated, will inspire the confidence of the people to participate in the process without any panic or agitation, as is already being witnessed all over the country.
The letter is reproduced below…