Nigeria Bins Demonetisation

The Central Bank of Nigeria (CBN) has confirmed that it will allow old banknotes that were due to be phased out in December to remain legal tender indefinitely, following a ruling by the country’s Supreme Court.

The CBN began replacing high denomination naira notes with redesigned ones in December 2022. It had planned to end their use from February until a court ruled that the notes should remain in circulation 31 December after the plans were challenged by state governors. That deadline has also now been lifted by the Supreme Court.

‘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,’ it said in a statement. ‘This is in line with international best practices and to forestall a repeat of earlier experiences.’

The demonetisation program introduced by former Governor Godwin Emefiele was designed to mop up excess liquidity, thwart illegal activity and promote electronic payments.

But the way the demonetisation was carried left Nigerians struggling to pay for food and supplies. The country of over 220 million people, less than 50% of whom have a bank account, was initially given just six weeks to exchange existing notes for new ones, and demand far outstripped the supply of new notes.

In scenes reminiscent of a similar demonetisation exercise in India six years earlier, the move led to long queues at ATMs and bank branches, and even riots.

The CBN has now directed its branches to continue to accept and issue banknotes of all denominations in both the old and new versions from DMB (Deposit Money Banks), and has assured the public that there are sufficient stocks of banknotes in the country.