By MacDonald Dzirutwe

LAGOS (Reuters) – Nigeria’s Supreme Court docket on Wednesday restrained the federal government, by the central financial institution, from ending the authorized tender standing of previous banknotes on Friday following strikes to exchange them with newly designed notes.

The ruling got here shortly after the Worldwide Financial Fund stated Nigeria ought to think about extending its deadline to swap previous banknotes due to the disruption to commerce and funds attributable to a scarcity of latest notes.

THE PLAN

Nigeria’s central financial institution determined final yr to start out circulating newly designed 200, 500 and 1,000 naira notes, initially giving folks till Jan. 31 to do away with their previous notes, which might not be authorized tender after that date.

The financial institution stated it wished to cut back the amount of money in circulation with the intention to higher management liquidity, curb inflation and transfer in the direction of a cashless economic system.

These with financial institution accounts have been required to carry their previous banknotes to a financial institution department and have the corresponding quantity credited to their accounts.

Tens of millions of Nigerians who shouldn’t have financial institution accounts, particularly in rural areas, have been anticipated to alternate their previous notes for brand spanking new ones at banking brokers.

In late January, the central financial institution prolonged the deadline till Feb. 10 to permit extra folks in rural communities to alternate their previous notes.

GOALS

Virtually 85% of the three.23 trillion naira ($7.18 billion) in money in circulation had been held exterior of banks. In January, the central financial institution stated round 1.3 trillion naira had been deposited into banks since October

To realize its purpose of lowering liquidity, the central financial institution stated it might restrict weekly money withdrawals for checking account holders at 100,000 naira from January onwards.

One other acknowledged objective of the changeover was to cut back fraud because the central financial institution says the brand new notes’ security measures will make them tougher to counterfeit.

COMPLAINTS

Many Nigerians complained the deadline was too tight for these residing in rural areas or working in casual markets.

Politically, the plan got here at a delicate time, with elections for president, Nationwide Meeting seats, state governors and native authorities due in late February and March.

Politicians, who usually use onerous to hint money for marketing campaign handouts, denounced the plan as too draconian.

With money accounting for under 6% of Nigeria’s complete cash provide of fifty trillion naira, analysts doubted the operation would assist the central financial institution’s acknowledged objective of getting a grip on cash provide and inflation.