An Islamic Law Analysis of the Naira Swap Policy

By Nurudeen Olaleye, Esq.

Recently, Nigeria re-designed three of her bank notes, namely; N200, N500 and N1,000 and introduced same into the financial system. The Federal Government of Nigeria acting through the Central Bank of Nigeria (CBN) announced the policy on the 26th October, 2022, with the claim that the fiscal policy was embarked upon in a bid to control the economy, particularly the huge cash flow in circulation. With the release of the new naira notes, the old naira notes were to be in circulation with the new naira notes until the 31st January, 2023 when the old naira notes would cease to be legal tender. At the end of January, 2023, the new naira notes were not in circulation, and due to the cries of the people, the Central Bank of Nigeria (CBN) extended the initial deadline till 10th February, 2023. During this period, the CBN intensified efforts through collaboration with security and anti-graft agencies to ensure compliance of Deposit Money Banks (DMBs) with CBN directives.

Some days to the new deadline, the state governments of Zamfara, Kaduna and Kogi approached the Supreme Court with an application seeking an interim injunction restraining the Federal Government from enforcing the 10th February, 2023 deadline earlier announced. The Supreme Court graciously granted the application on the 8th February, 2023 and made an order that the Federal Government should maintain status quo ante. What this mean is that people can still continue to spend the old naira notes of N200, N500 and N1,000, pending the hearing and determination of the motion on notice for interlocutory injunction. More state governments have later joined the suit, with some on the side of the plaintiffs (the three state governments) and others on the side of the defendant (the FGN).

On the 10th February, 2023, the masses became apprehensive and confused as to which of the two decisions to comply with, that of the CBN or the Supreme Court. They however still continued to manage to transact with the old notes among themselves, most especially when the new notes were not in wide circulation. The last stroke that however broke the camel’s back was the national broadcast of Thursday, 16th February, 2023 where President Muhammadu Buhari declared that the old N500 and N1, 000 notes would no longer be legal tender, but that the old N200 would be re-introduced into the financial system and allowed to remain in circulation till 10th April, 2023. The President pleaded with Nigerians for understanding and listed the reasons for the policy decision to include the need for CBN to keep a firm control over money in circulation, boosting the economy, tightening the loopholes associated with money laundering, enhancing security, etc.

Also Read: Emefiele Confirmed To Me Old Naira Notes Are Now Acceptable – Soludo

The primary objective of this article is to consider the foregoing set of facts against the principles of Islamic law with a view to ascertaining the conformity or otherwise of the fiscal policy and its implementation with the divine law.

Islamic law, in all its parts, aims at securing benefits for the people both in this world and in the hereafter and protecting them against corruption and evil. The affairs of the leader concerning his people are judged by reference to public interest (maslahah, pl. masalih). This is a standing principle regulating the relationship between the ruler and his people in Islamic political affairs (as Siyaasah ash Shari‘yyah). In other words, whatever brings good or benefit is encouraged and whatever will resort in harm or hardship to the people is prohibited. For Islamic law to fulfil the masalih purposes of justice, equality, human rights, development, civility etc., implementation of the higher intents of Islamic law (Maqasid al-Shariah) is vital. The higher intents highlight human welfare as the ultimate purpose of all Islamic rulings and stresses its importance, while basing itself on the foundational postulates of Islamic faith and scripture.

For the sake of clarity and particularly of the non-Muslim audience, the higher intents of Islamic law are basically five, namely; protection of religion (Hifz al-deen); protection of life (Hifz al-nafs); protection of dignity or lineage (Hifz al ‘ird aw al-nasl); protection of intellect (Hifz al-’aql); and protection of property (Hifz al-mal). The neglect of these higher intents will lead to total disruption and disorder and could, in some other cases, lead to an undesirable end. They must be protected and all measures that aim at safeguarding them must be taken, whether by the individuals or by government authorities. This is to ensure that the welfare of people is guided jealously.

In essence, every policy of government must be geared towards attaining a public interest and for such policy to qualify as constituting public interest; it must conform with the higher intents and the generality of the people or a vast majority of them must be beneficiaries of such policies. Otherwise, such policy will only be regarded as facilitating private (not public) interest. It is also not enough that the policy appears good or public interest oriented on paper, the implementation must be largely attested to as drawing benefits to the people. Since the higher intents (maqasid) is a tool for achieving public interest (maslahah), any government policy that is inconsistent with the higher intents will be invalid. Conversely, where a measure or policy secures the values as encapsulated in the higher intents, it is then regarded as falling within the scope of public interest (maslahah).

Furthermore, Muslim Jurists have formulated principles known as Islamic legal maxims (Al-qawā’id al-fiqhīyyah), which are derived from various sources of Islamic law for the purpose of deducing applicable rules of Islamic law. About five of them are termed fundamental, universal or primary legal maxims. The maxim “harm must be eliminated” (al-ḍarar yuzāl) is one these universal maxims and given its imports, it bears much relevance to the present discussion. The principle enunciated in this legal maxim is that the leader (or anybody for that matter) must not inflict harm, hardship or difficulty on the led, and vice versa. Hardship in this maxim refers to that type that exceeds the normal bearable limit and human ability to perform certain deed. This legal maxim enjoys authoritative credence in the glorious Qur’an where Allah says: “He has not placed upon you in the religion any hardship” (Qur’an 22 (Suratul Hajj): 78). He says further: “Allah does not intend to place hardship upon you” (Qur’an 5 (Suratul Maidah): 6). He also says: “Allah wants ease for you and He does not want hardship for you” (Qur’an 2 (Suratul Baqarah): 185). Also in one tradition, the Prophet (SAW) was reported to have said: “La darara wa la dirara” (No harm shall be inflicted or reciprocated). A number of rulings deduced from this maxim are: a greater harm is eliminated by tolerating a lesser one; when two wrongful acts meet, the remedy of the greater is sought by the doing of the less; the smaller of two harms is chosen; the repelling of mischief is preferred to the acquisition of benefits; and harm is repelled as far as possible.

Another applicable Islamic law maxim is “hardship begets facility” (Al-mashaqqah tajlib al-taysīr). This maxim connotes that where strict adherence to the original rules may lead to harm and injustice, alternative ways must be followed in order to overcome difficulties and hardship. This maxim shares the same wisdom with yet another maxim of “necessity renders prohibited things permissible” (Ad-daruuraat tubeeh al-Mahthuuraat). From a pure Islamic law point of view, necessity sets in where a human being comes to an extreme situation that if he/she does not take the forbidden or the prohibited, he/she will pass away or will be closer to passing away. So, for the fear of losing one’s life, property or a benefit, the impermissible would be made permissible on such dire occasion. An example is the exemption granted for those who are sick and those who are on a journey to break their fast in the month of Ramadan. Such permission granted is properly termed concession (rukhsah). This is necessary in order to remove hardship from human being and ensure justice and fairness.

Since the President’s national broadcast and the ban of the old N500 and N1, 000 denominations, life and living conditions have become more difficult to millions of Nigerians. Lives have been lost needlessly. Hunger and starvation become the new trend. Jobs are lost. Businesses, particularly small scale businesses which are the backbone of any nation’s economy, have been grounded. Homes are now destabilized. Patients die in the hospital for inability to access their legitimately earned money either by cash or bank transfer as many DMBs are yet to upgrade their digital payment system to enhance swift electronic money transfers. Pupils are forced to abandon school and stay at home. Prostitution is promoted while hooliganism and crime rate are on the increase. Moving from one place to another becomes more difficult. Responsible people now beg for money to make ends meet. Nigerians can no longer have access to their hard-earned monies. Only Allah knows what would happen in the couple of days when the hunger becomes unbearable for the people. Yet, the nation is going to the polls in few days to come. A hungry man is an angry man!

The appalling picture of endlessly long queues at banks clearly shows the untold hardship that the FG has foisted on the Nigerian people. The whole society is in disarray and the only consolation from the Nigerian Government is series of incoherent political statements from the President and his agent, the CBN Governor. For instance, the President’s national broadcast was so unfortunate. Unfortunate, not only because the broadcast was a contempt of court, but also that it succeeded ultimately in compounding the woes of the innocent people. In a nation with huge unbanked population and over two hundred million people, one is tempted to conclude that the President was determined to finally condemn Nigerians to penury with the short deadline for the complete phase out of the old bank notes.

It is crystal clear from the principles of Islamic law briefly elaborated earlier, that the hardship and mischief occasioned by the naira re-design policy and its implementation is greater than whatever benefit the Federal Government is trying to achieve or harm it is preventing through the policy. Where there is a conflict between two evils, the lesser one should be preferred. As a result, releasing the already withdrawn old N500 and N1,000 notes into circulation to lessen the hardship on the people, especially now that the new notes are not yet in wider circulation, is preferred in Islamic law to whatever may be the benefits to be derived from the policy.

President Muhammad Buhari acted contrary to the Islamic legal maxim, hardship begets facility, (al-mashaqqah tajlib al-taysīr) with his national broadcast of Thursday, 16th February, 2023 where he declared that old N500 and N1, 000 denominations would no longer be legal tender. Since the wisdom behind the maxim is to the effect that necessity renders prohibited things permissible, it therefore means that the date of the expiration of the old naira notes having lapsed and the new naira notes not yet in wider circulation, the old ones should have been allowed to remain as legal tender along the new ones.

Flowing from the above, the Federal Government of Nigeria, acting through the Central Bank of Nigeria (CBN) is hereby urged to, as a matter of urgency, lift the burden of the financial crunch off the Nigerian people by either releasing in adequate volumes, the new notes of N200, N500 and N1, 000 into circulation or allow the old notes to remain as legal tender and also co-circulate along with the new ones. Islamic Law frowns at policies that bring about hardship or difficulty on the people and strongly condemn same. Denying the people access to their legitimate money offends higher intents of Islamic law, as it is a grievous wrong or evil. Whatever further steps the President shall take, it is important to stress the point that President Muhammadu Buhari should be ready to render account on how he manages the affairs of Nigerians before Allah, on the day his current status would not be of help to him. Allah would never allow Nigerians to suffer in vain. He would do justice!

Nurudeen Olaleye, Esq. writes from Chief Toye Coker & Co., Abeokuta, Ogun State.