People queueing at cash dispensers in Kano, north-west Nigeria
People queueing at cash dispensers in Kano, a city in the north of Nigeria. There have been protests in parts of the country amid frustration over the unavailability of the new banknotes © Pius Utomi/AFP/Getty Images

Nigeria’s highest court and the IMF have weighed into the botched plan to replace the country’s largest currency notes, a rollout that has caused chaos in the west African economy just weeks ahead of a crunch general election.

The Supreme Court on Wednesday slapped a temporary ban on the enforcement of the current deadline to replace the N200, N500 and N1,000 notes on Friday, pending the hearing of a lawsuit brought by three northern states challenging the new currency redesign. It adjourned that hearing until February 15.

The central bank, which is overseeing the introduction of the new notes, has already had to extend the deadline to swap the old currency after shortages of the notes led to huge queues at banks across the country.

The IMF also called for Nigeria to allow more time to complete the process, noting “problems” with the rollout. “In spite of measures introduced by the central bank to mitigate the challenges in the banknote swap process, the IMF encourages the central bank to consider extending the deadline, should problems persist in the next few days,” the US-based lender said on Wednesday.

The trio of states took the federal government to court, arguing that the scarcity of new notes was causing severe hardship and saying there had been “insufficient and unreasonable time” to complete the process. The states argued that “economic activities were . . . grinding to a halt” as a result of the currency redesign. The central bank declined to comment.

The interim order is the latest twist in the chaotic rollout first announced late last year. The central bank said at the time that the new notes would be more secure, prevent counterfeiting and allow Nigeria to move to a more modern card and electronic payment-based economy.

The notes were unveiled in October but the central bank only started supplying them to commercial lenders in December, leading to a shortage across a country where most transactions are in cash. The original January 31 deadline for the old notes to cease being legal tender had already been extended by 10 days before Wednesday’s Supreme Court ruling.

Long queues have formed outside cash machines and scuffles have broken out in banking halls as customers jostled to withdraw money ahead of the deadline. There have been protests in parts of the country amid frustration over the unavailability of the notes.

Bank executives say they have not been supplied with enough Naira to replace the old ones that have been collected, estimated to be almost N2tn. Nigerian anti-corruption agencies and President Muhammadu Buhari have alleged that some banks are hoarding the new currency.

The suit brought by the states underscored the tensions within the ruling All Progressives Congress (APC) ahead of presidential and parliamentary elections to replace the outgoing Buhari on February 25.

All three states are led by APC governors. Bola Tinubu, the APC candidate, has claimed that the controversy over the new notes is a ploy to derail his presidential campaign.

Nasir Ahmad el-Rufai, governor of Kaduna, one of the states that filed the suit and a Tinubu ally, said on national television that unnamed “elements in [Nigeria’s presidential palace] want us to lose the elections because they didn’t get their way” during last year’s party primaries.

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