By MacDonald Dzirutwe

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the federal government, by way of the central financial institution, from ending the authorized tender standing of outdated banknotes on Friday following strikes to switch them with newly designed notes.

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here shortly after the Worldwide Financial Fund mentioned Nigeria ought to think about extending its deadline to swap outdated banknotes due to the disruption to commerce and funds attributable to a scarcity of recent notes.

THE PLAN

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circulating newly designed 200, 500 and 1,000 naira notes, initially giving folks till Jan. 31 to do away with their outdated notes, which might now not be authorized tender after that date.

The financial institution mentioned it wished to scale back the amount of money in circulation so as to higher management liquidity, curb inflation and transfer in the direction of a cashless financial system.

These with financial institution accounts have been required to carry their outdated banknotes to a financial institution department and have the corresponding quantity credited to their accounts.

Hundreds of thousands of Nigerians who shouldn’t have financial institution accounts, particularly in rural areas, have been anticipated to change their outdated notes for brand new ones at banking brokers.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financial institution prolonged the deadline till Feb. 10 to permit extra folks in rural communities to change their outdated notes.

GOALS

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

To attain its goal of lowering liquidity, the central financial institution mentioned it will restrict weekly money withdrawals for checking account holders at 100,000 naira from January onwards.

One other acknowledged aim of the changeover was to scale back fraud because the central financial institution says the brand new notes’ security measures will make them more durable 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 sometimes use exhausting to hint money for marketing campaign handouts, denounced the plan as too draconian.

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