Business Maverick: Governors Sue Nigeria Over Naira Redesign as Cash Vanishes

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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 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.

To be fair, India’s experience with its demonetisation was sufficiently well-documented; it’s not like any other country would not have known what to expect“The Naira 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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