Nigeria’s ruling party is divided over efforts to replace high-denomination banknotes, as many members who face elections in a week distance themselves from a policy backed by the president that’s disrupting life in Africa’s most populous country.
(Bloomberg) —
Nigeria’s ruling party is divided over efforts to replace high-denomination banknotes, as many members who face elections in a week distance themselves from a policy backed by the president that’s disrupting life in Africa’s most populous country.
At least 10 state governors from the ruling All Progressives Congress have asked the Supreme Court to overturn the Central Bank of Nigeria’s demonetization policy, which is supported by President Muhammadu Buhari as he nears the end of his final term. It’s unclear if the judges will reach a decision before presidential and legislative elections on Feb. 25.
The central bank announced its plan in October to replace old banknotes, including the 1,000-naira bill, worth $2.13 and the highest denomination available. A lack of new notes has led to a shortage of cash in an economy with a vast informal sector where only 60% of households have access to a bank account.
The controversy has pitted the incumbent against Bola Tinubu, the presidential candidate from Buhari’s party, who backs keeping old notes in circulation longer.
A Supreme Court injunction on Feb. 8 blocked the central bank from enforcing its policy until it rules on the governors’ lawsuit. The case is adjourned until Feb. 22.
Spearheading the campaign against the initiative is Tinubu’s ally in the APC, Kaduna State Governor Nasir El-Rufai.
In a televised broadcast Thursday, El-Rufai said central bank Governor Godwin Emefiele deceived the president by presenting the measures as a way to prevent politicians that had hoarded cash from buying votes. The central banker is causing “a nationwide shortage of cash so that citizens are incited to vote against APC candidates,” El-Rufai said.
The central bank argues the measures are necessary to mop up excess cash, rein in inflation and combat the scourge of kidnapping-for-ransom.
While the regulator extended a deadline to replace 200-, 500- and 1,000-naira notes from the end of January to Feb. 10, long lines have become common outside bank branches and ATMs. The lack of cash has made daily activities such as riding the bus or buying food an ordeal, and protests against the measures have broken out around the country.
On Edge
Concern about the electoral fallout is justified, according to Idayat Hassan, director of the Abuja-based Centre for Democracy and Development. “Everybody is on the edge in Nigeria,” Hassan said.
In an attempt to ease the shortages, Buhari ordered the release of old 200-naira notes back into circulation for two months, although critics within his party said that is inadequate.
El-Rufai said the president’s actions “amount to total disregard and disobedience” of the Supreme Court. Femi Gbajabiamila, speaker of the House of Representatives and another Tinubu ally, said Friday the government had displayed “a wanton disregard for the rule of law.”
Tinubu has backed the court’s interim decision and recommended the old and new notes should co-exist for one year. Despite the split, Buhari’s spokesman said in a statement Friday it “is not in doubt” that Tinubu is the president’s favored successor.
The rift comes as the APC faces uncertain prospects after winning the last two elections. Polls show Atiku Abubakar of the main opposition Peoples Democratic Party and third-party candidate Peter Obi have a chance to beat Tinubu.
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