Nigeria’s chaotic banknote switch ruled invalid by top court | CNN Business

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Abuja, Nigeria
CNN
 — 

Nigeria’s botched attempt to replace its banknotes has been declared invalid by the country’s Supreme Court.

In a ruling Friday, the country’s highest court said a presidential directive to discontinue the use of old naira notes following a redesign was illegal. The court said the old banknotes should continue to be legal tender, alongside new versions, until the end of this year.

Nigeria’s old 200-, 500-, and 1,000-naira ($2.17) notes ceased to be legal tender starting February 11, sparking violent protests across the country as millions of people struggled to get their hands on the redesigned money. That prompted a partial retreat by the government, which agreed to reissue the old 200-naira notes for a limited period of time.

The Nigerian presidency has yet to respond to the Supreme Court ruling.

President Muhammadu Buhari unveiled the new-look currency in November last year with the aim of reining in counterfeiting and the hoarding of large sums of money outside the banking system. But banks have been unable to disburse enough of the new naira, leaving many Nigerians lining up at cashpoints in a desperate bid to get enough cash to meet their daily expenses.

The pressure on the banking infrastructure has also caused many computer servers to fail, multiple sources have told CNN.

The cash crunch has led to frayed tempers and hardship, particularly among those who work in the cash-based informal economy and for citizens who live in rural areas.

Violent protests have been recorded in parts of the country. Some people have died during the protests, local media have reported, and bank branches have been damaged.

Sixteen Nigerian states took the federal government to the Supreme Court to challenge the short notice they were given to exchange the old notes for new ones. They warned that the currency switch could lead to “the breakdown of law and order.”

In a televised broadcast last month, Buhari expressed sympathy for Nigerians experiencing hardship and assured that the supply of cash would improve in the coming days. Many Nigerians, however, said they were still struggling to get cash at the banks.

In January, the central bank said that of 3.23 trillion Nigerian naira ($6.9 billion) in circulation as of October last year, “only 500 billion naira was within the banking industry” while a whopping 2.7 trillion naira ($5.8 billion) was “held permanently in people’s homes.”

In his address last month, Buhari disclosed that around 80% of those funds had been returned to the banks since the unveiling of the new banknotes in November.

— This is a developing story and will be updated.

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