The Central Bank of Nigeria (CBN) has declared that the old N200, N500, and N1,000 notes will remain legal tender indefinitely, overturning its initial plan to phase them out.
The apex bank’s decision, announced on Tuesday, extends the legal tender status deadline of the older currency design, citing adherence to international best practices and a desire to prevent a recurrence of past challenges.
“Thus, all banknotes issued by the Central Bank of Nigeria (CBN), in accordance with Section 20(5) of the CBN Act 2007, will continue to remain legal tender, ad infinitum, even beyond the initial December 31, 2023, deadline. The Central Bank of Nigeria is working with the relevant authorities to vacate the subsisting court ruling on the same subject.”
The CBN’s Director of Corporate Communications, Isa AbdulMumin, clarified in a statement that the bank will continue to issue and accept all denominations of banknotes, both old and redesigned, to and from deposit money banks (DMBs).
“The general public is enjoined to continue to accept all Naira banknotes (old or redesigned) for day-to-day transactions and handle these banknotes with utmost care, to safeguard and protect the lifecycle of the banknotes,” it added.
This development brings resolution to a prolonged controversy that began when new currency notes were introduced last year under the leadership of the former governor, Godwin Emefiele. Emefiele, currently facing a 20-count fraud charge, initially defended the introduction of new notes as a strategy to combat inflation, kidnapping, and vote-buying ahead of the 2023 general elections.
“Truly speaking, at the margin, I may be wrong, but I think kidnapping and ransom-taking have somehow reduced. Security agents are doing a fantastic job,” Emefiele said.
“I think it (naira redesign) has slowed those people down because they know that if they collect old notes, nobody is going to collect it from them. So, it might as well as think of other ways.”
However, the implementation of the new notes on the eve of the elections triggered a nationwide cash crunch, leading to widespread panic and violent protests in some regions of Nigeria. A Supreme Court order intervened, restraining the CBN from enforcing its deadlines for phasing out the old banknotes.
Old Naira Notes’ Fate Uncertain Amid Economic Hardship
Formerly opposed to the introduction of the new notes, President Tinubu, during his inauguration in May, pledged to review the policy, emphasizing that both currencies would be treated as legal tender during his administration.
While the CBN initially extended the validity of the old notes until December 2023, the latest announcement, made under the tenure of the new governor, Yemi Cardoso, establishes the indefinite legal tender status of the old currency notes.