A.G. of Kaduna State & Ors. vs A.G. of Federation & Ors. (2023)

LAWGLOBAL HUB Lead Judgment Report – SUPREME COURT

EMMANUEL AKOMAYE AGIM, JSC (Delivering the leading judgment)

On 26-10-2022, the Governor of the Central Bank of Nigeria by Press Remarks during a special press briefing at the Central Bank of Nigeria announced that the President of the Federal Republic of Nigeria has given the Central Bank of Nigeria the approval to redesign, produce, release and circulate new series of bank notes at N200, N500 and N1000 levels and to call in or withdraw from circulation existing bank notes of the same levels, that in line with the approval, the Central Bank of Nigeria has finalized arrangements for the new currency to begin circulation from 15-12-2022 after its launch by the President, that the new and existing currencies shall remain legal tender and circulate together until 31-1-2-23 when they shall cease to be legal tender, that this naira redesign policy would in addition to ensuring that our legal tender is strong and effective, deepen our drive to entrench cashless economy, help rein in the huge currency outside the banking system, thereby making monetary policy more efficacious and help minimize incidents of terrorism and kidnapping through the reduction or elimination of the large volume of money outside the banking system used as source of funds for ransom payments.

The Central Bank of Nigeria wrote a letter dated 6-12-2022 headed “Naira Redesign Policy – Revised Cash Withdrawal Limit” to all Deposit Money Banks (DMBS), other Financial Institutions (Payment Service Banks (PSBS), Primary Mortgage Banks (PMBS) and Microfinance Bank (MFBS) directing them that the:

“1. The maximum cash withdrawal over the counter (OTC) by individuals and corporate organizations per week shall henceforth be N100,000 and N500,000 respectively. Withdrawals above these limits shall attract processing fees of 5% and 10% respectively.

2. Third-party cheques above N50,000 shall not be eligible for payment over the counter, while extant limits of N10,000,000 on clearing cheques still subsist.
3. The maximum cash withdrawal per week via Automated Teller Machine (ATM) shall be N100,000 subject to a maximum of N20,000 cash withdrawal per day.
4. Only denominations of N200 and below shall be loaded into the ATMs.
5. The maximum cash withdrawal via point of sale (POS) terminal shall be N20,000 daily.
6. In compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits is required for legitimate purposes, such cash withdrawals shall not exceed N5,000,000.00 and N10,000,000.00 for individuals and corporate organizations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to enhanced due diligence and further information requirements”.

It stated therein that this is further to the naira redesign policy and in line with the Central Bank of Nigeria cashless policy.

The apex Bank again wrote a letter dated 21-12-2022 headed “Re: Naira Redesign Policy – Revised Cash Withdrawal Limits” to the same addressees stating that following its letter of 6-12-2022 on the naira redesign policy and revised cash withdrawal limits and based on the feed backs it has received from stake holders, it has reviewed the cash withdrawal limits as follows:

“1. The maximum weekly limit for cash withdrawal across all channels by individuals and corporate organizations shall be N500,000.00 and N5,000,000.00 respectively.

2. In compelling circumstances where cash withdrawal above the limits in (1) above is required for legitimate purposes, such requests shall be subject to a processing fee of 3% and 5% for individuals and corporate organizations, respectively.
3. Further to (2) above, the financial institution shall obtain the following information from the customer, at the minimum, and upload same on the CBN portal created for the purpose.
4. Third-party cheques above N100,000 shall not be eligible for payment over the counter, while the extant limit of N10 million on clearing cheques shall subsist.”

By 15th December, 2022, the new naira notes were not available despite the assurances of the Federal Government that they would be introduced on that date. Most people had rushed to pay their existing currencies into their banks ahead of the dateline in the expectation that the new notes would be available by mid-December 2022.

Their expectations were dashed as the new notes were scarcely available. The Central Bank of Nigeria admitted in its press statement of 19-1-2023 that since the call in or withdrawal of the old banknotes started, the bank has received 1.9 trillion Naira but did not state the amount of the new redesigned bank notes it has printed and made available to banks and other institutions to pay to persons that had returned or were still returning the old currencies.

However, it is not in dispute that none of the banks country-wide had received enough new bank notes from the Central Bank of Nigeria to pay their customers the prescribed maximum amount of withdrawable cash of N5,000 for individuals and N500,000 for corporate organizations per week.

For days running into weeks, many customers go to the banks or ATM machines and remain in long queues from early morning till evening and go back home empty-handed. In the few cases of payments being made, customers are paid as little as N1,000, N2,000, N5,000, and N20,000 irrespective of their huge bank deposits. While it remained very difficult to obtain or access the new naira notes in the banks, the old banknotes had ceased to be legal tender after the 31-1-2023.

Claiming that without consulting or seeking the advice of the National Council of States and the National Economic Council, which are bodies to which the Governors of the plaintiff States belong, and without prior notice or reasonable notice to the public, the President issued the directive or approval for the implementation of the redesign, production, release and circulation of the new bank notes and withdrawal of the old bank notes, that no Federal Executive Council or National Security Council meeting was called by the President to discuss the economic and security implications of the policy before his approval of the policy and that no consultation whatsoever took place between Federal Government of Nigeria and all stakeholders in the Nigerian economy, including State Governments, Federal and State legislatures, financial institutions, civil societies, professional bodies and other concerned persons before the President directed or approved the redesign production, release and circulation of the new bank notes and withdrawal of the old bank notes, that the implementation of the production, release and circulation of the new bank notes and withdrawal of the old bank notes has punished and inflicted pain and huge losses on their citizens, massively disrupted trades and businesses generally, particularly small and medium enterprises and the rural economies in their States, grinding to a halt all economic activities, made impossible the functioning of the State governance structures that require cash, the 1st to 3rd plaintiffs on 3-2-2023 commenced Suit No. SC/CV/162/2023 by originating summons praying for the determination of the following questions –

1. Whether the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500, and 100 Naira notes is consistent with the provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) which make provision for the Executive Powers of the President of the Federation and the extant laws on the subject matter?
2. Whether the 3-month notice given for the implementation and completion of the said demonetization policy by which time the old N1000, N500 and N200 Naira notes shall cease to be legal tender satisfies the condition set out in section 20(3) of the CBN Act, 2007?
3. Whether the President can unilaterally give a directive to embark on the demonetization policy pursuant to section 20(3) of the CBN Act, 2007, in view of Nigeria’s fiscal federalism, the economic interests of the constituents of the Federation and without consultation with, and advice from the plaintiffs individually, and in their capacity as members of the National Council of Sates and National Economic Council, and also whether such a Directive can be given without consultation with, and advise from the Cabinet, the National Security Council and other stakeholders?
4. Whether in issuing the directive for demonetization policy pursuant to section 20(3) of the CBN Act, 2007 on behalf of the Federation of Nigeria, the President is not under an obligation to ensure that adequate structures are put in place for the plaintiffs and Nigerian citizens prior to the implementation of the said directives.
5. Whether the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500 and 1000 Naira notes does not unlawfully impede the exercise of the Executive Powers of the plaintiffs’ States and other obligations to facilitate and protect the welfare of the citizens of the said States pursuant to section 5(2) and other provisions of the Constitution of the Federal Republic of Nigeria (as amended) as well as other extant laws?
6. Whether, the directive given by the President pursuant to section 20(3) of the CBN Act, 2007 limiting the amount that can be withdrawn and the charges therein is Constitutional and binding on the plaintiffs?
7. Whether, the directive given by the President pursuant to section 20(3) of the CBN Act, 2007, imposing a timeline for redeeming at face value the said old Naira notes is not contrary to the provisions of the said section 20(3) of the CBN Act and the Constitution of the Federal Republic of Nigeria, 1999 (as amended)?
8. Whether the power the President of the Federation exercised is expropriatory against the plaintiffs’ States?

The reliefs claimed for in the originating summons are as follows-

“1. A declaration that the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500, and 1000 Naira notes is not consistent with the provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) which make provision for the Executive Powers of the President of the Federation and the extant laws on the subject matter.