The Truth About CBN’s Authority To Redesign The Naira

With all the financial narratives going into the redesign of the Nigerian naira notes, we come to the question relating to what the Nigerian law and constitution says about CBN’s power to redesign, produce, release and circulate new series of banknotes.

Godwin Emefiele, the governor of the central bank, declared on October 26th that the president had given the apex bank permission to alter the N200, N500, and N1000 notes.

According to him, the Management of the CBN has requested and received the approval of President Muhammadu Buhari to redesign, produce, release, and circulate new series of banknotes at N200, N500, and N1,000 levels in accordance with the provisions of Sections 2(b), Section 18(a), and Section 19, Subsections a and b of the CBN Act 2007.

The new central bank’s decision to alter the N200, N500, and N1,000 notes was made without consulting the country’s finance minister, she said during a budget defense session.

The central bank governor reacted by saying that, in order to implement the policy, he does not require the approval of anyone other than the president.

The CBN Act’s provisions, which Mr. Emefiele also referenced in the news release he published, appear to be supported by the comment he made.

But what does excerpts of Sections 18, 19, and 20 of the act say concerning the CBN’s authority towards redesigning the Naira?

Section 18 states that:

The Bank shall-
(a) Arrange for the printing of currency notes and the minting of coins;

(b) Issue, re-issue and exchange currency notes and coins at the Bank’s offices and at such agencies as it may, film time to time, establish or appoint;

(c) Arrange for the safe custody of un-issued stocks of currency notes and for the preparation, safe custody and destruction of plates and paper for the printing of currency notes and disc for the minting of coins; and

(d) Arrange for the destruction of currency notes and coins withdrawn from circulation under the provisions of section 20 (3) of this Act or otherwise found by the Bank to be unfit for use.

While the section 19 states:

(1) The Currency notes and coins issued by the Bank shall be-

(a) In such denominations of the Naira or fractions thereof as shall be approved by the President on the recommendation of the Board; and

(b) Of such forms and designs and bear such devices as shall be approved by the President on the recommendation of the Board.

(2) The standard weights and composition of coins issued by the Bank amount of remedy and variation shall be determined by the President on the recommendation of the Board.

Section 20 on the other hand posits that:

(1) The currency notes issued by the Bank shall be legal tender in Nige at their face value for the payment of any amount.

(2) The coins issued by the Bank shall, if such coins have not been tampered with, be legal tender in Nigeria at their face value up to such amount or amounts may be determined, from time to time, by the Bank.

(3) Notwithstanding Sub-sections (1) and (2) of this section, the Bank shall have power, if directed to do so by the President and after giving reasonable notice in that behalf, to call in any of its notes or coins on payment of the face value there and any note or coin with respect to which a notice has been given under this Subsection, shall, on the expiration of the notice, cease to be legal tender, but, subject to section 22 of this Act, shall be redeemed by the Bank upon demand.