As inflation continues to take its toll, lower denominations of the Naira currency are losing their purchasing power across major markets, rendering them practically useless.
Once commonplace for transactions like purchasing a sachet of pure water for N5 or using N20 to ‘settle’ police officers at checkpoints, these denominations have struggled to retain their value in recent years.
A recent market survey conducted by DAILY POST revealed that more than half of Nigeria’s legal tender notes are now unable to make significant purchases.
Despite this predicament, the Central Bank of Nigeria (CBN) continues to recognize denominations such as 50 kobo, N1, and N2 in coin form, alongside N5, N10, N20, and N50 printed on polymer materials.
The depreciation of the Naira in the past six months has been substantial, with rates reaching as high as N1,900 to a single dollar before CBN interventions brought it down to approximately N1050 per dollar.
The consequence of this depreciation is striking: Nigeria’s highest denomination, N1000, is now worth less than a single dollar. Holding $1000 makes one a millionaire in Naira, while possessing just $1 equates to over N1,000.
Despite efforts to bolster the Naira’s value, prices of essential goods and commodities show no signs of decreasing significantly.
Economists attribute Nigeria’s inflation to various factors, including foreign exchange (FX) dynamics, among others. Despite these challenges, the government continues to print lower denomination currencies at a considerable cost.
Reports indicate that printing N5, N10, N20, and N50 notes costs approximately N1000 each due to production challenges at the Nigeria Security Printing and Minting plc (NSPM), which is unable to print on polymer.
Experts are urging the CBN to halt the printing of lower denominations and reassess the currency system to reflect current economic realities.
Abiodun Ayangbemi, an economist, stressed the need to discontinue printing lower denominations that no longer serve as effective means of exchange or store of value.
Lekan Olaleye, a monetary policy expert, proposed a re-denomination policy similar to Ghana’s, which removed two zeros from their currency in 2007 to mitigate inflationary pressures.
Former CBN Governor, Sanusi Lamido’s proposal to introduce N5000 notes and coin lower denominations like N5, N10, and N20 faced public backlash in 2012, leading to its abandonment. However, years later, prices of goods and services have surged beyond the levels seen in 2012, underscoring the urgency for reforms.
