Nigeria’s demonetization plan is causing a schism within the ruling All Progressives Congress.
Three state governors — from Kaduna, Kogi and Zamfara in the north of the country — all belonging to the ruling party sued the federal government, seeking the suspension of the central bank’s plan that has caused a cash crisis and disrupted transactions in Africa’s largest economy.
The governors appealed to the nation’s Supreme Court to rule on the legality of the Central Bank of Nigeria’s decision to replace 2.7 trillion ($5.86 billion) worth of high denomination bills with redesigned notes, the reasonableness of the six-week window to phase out the old bills, and whether the central government is exceeding its powers.
The governors asked the court to immediately suspend the exercise until the government “complies with relevant provisions of the law,” according to a document filed with the Supreme Court and seen by Bloomberg.
Chaos because of Nigeria’s demonetization mirrors the situation in India after Prime Minister Narendra Modi outlawed 86% of the nation’s cash. Confusion prevailed at bank branches across Africa’s most populous country as Nigerians struggled to to get new currency in exchange for their existing 200, 500- and 1,000 naira notes ahead of a Feb. 10 deadline, after which the bills cease to be legal tender.
“The Naira (whether old or new) is scarce,” the state governors said in a statement supporting their court case. “Economic activities are furiously grinding to a halt. Vast quantity of official worktime is spent looking for the scarce notes and hunger stalks the entire landscape of Kaduna, Kogi and Zamfara States. The States are on the verge of anarchy.”
The governors said that rural residents, who live far from bank branches, “have so far been unable to deposit their life savings, which are still in the old naira notes.”
President Muhammadu Buhari last week asked for a week in order to resolve the crisis. He blamed selfish and inefficient banks for the chaos and that an extension of the time frame for the exercise will not make any difference “as long a greed and selfishness continue to guide our actions.”
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