In his last week in office, President Olusegun Obasanjo signed into law several bills targeted at institutional reforms.

President Yar’Adua

One of them, the Central Bank of Nigeria Act 2007 was gazetted on June 1, three days after President Umaru Musa Yar’Adua assumed office. Following the constitution of the Federal Executive Council last month, President Yar’Adua directed the Attorney General to access all the Acts of National Assembly, especially the ones yet to be fully operational, and study them critically. While this was going on, the Central Bank Governor, Prof Chukwuma Soludo, addressed the media on the decision by the CBN Board to re-denominate the Naira purportedly in line with the powers granted him by CBN Act 2007.

The next day, he came to brief the Federal Executive Council on the policy and made it clear that he was merely informing Council members and not seeking any approval since he was acting in line with the powers allegedly granted him and the CBN Board by CBN Act 2007. While the President was concerned about the implications of the plan on the economy and would have preferred robust consultations with critical stakeholders before the announcement, he chose to await the Attorney-General’s advice on the contents and applications of the law cited by the CBN Governor.

In the interim, he mandated the Economic Management Team, led by Finance Minister, Dr. Samsudeen Usman, to meet with the CBN to discuss areas of concern including the following:
1. That under its so called "Strategic Agenda for the Naira" presented to the media, the CBN would abdicate its monetary responsibility by ceding such authority to states and local governments.
2. That the CBN would, without consultations, set a commencement date of August 1, 2008 for the re-domination of the Naira and the introduction of new Naira notes and coins.
3. That the CBN apparently had not given due consideration to the huge cost implications of the currency re-denomination at a time when there are more urgent demands on the resources available to Government.
4. That the economic value of the entire project to the nation at this point in time was doubtful.
However, while reviewing the laws accented to by former President Olusegun Obasanjo in his last days in office, as directed by President Yar’Adua, the Attorney-General discovered that the CBN Act 2007 does not in fact grant Prof. Soludo the powers he claimed with respect to currency denomination.

Section 19 of the Act clearly states as follows:
(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 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 and the amount of remedy and variation shall be determined by the President on the recommendation of the Board.
What these provisions mean is that only the President can give approval for Naira re-denomination if he is satisfied as to its desirability or necessity.

In the present circumstances, the President is not convinced of the merits of the Naira re-domination plan put forward by the CBN without appropriate regard for the present Administration’s insistence on due process and the rule of law.

That is why, in exercise of his power as Chief Law Officer of the Federation, and with the approval of the President, the Attorney General announced the suspension of the ‘Strategic Agenda for the Naira’ policy.

Source: the nation