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Naira Senate worried over scarcity of lower denomination notes

The lawmakers said the scarcity poses a severe threat to the economy of the nation as it is worsening inflationary trends.

  • Published:
Gen Murtala Muhammed on the N20 note play

Gen Murtala Muhammed on the N20 note

(Central Bank of Nigeria )

The senate has raised an alarm over the scarcity of lower denomination of Naira notes.

The upper chamber on Tuesday, February 13, 2018, said it is worrisome that the scarcity is coming at a time the country is just recovering from recession.

In the past weeks, Nigerians have lamented the scarcity of  N5, N10, N20, N50, N100 and N200 in the country.

Many also expressed disgust over the tartered and extremely dirty N100 notes currently in circulation.

The lawmakers said the scarcity poses a severe threat to the economy of the nation as it is worsening inflationary trends.

The senate, therefore, directed  its committees on Banking, Insurance and other Financial Institutions and Finance to investigate the scarcity and report back in two weeks.

A PDP lawmaker from Delta state, Peter Nwaoboshi, who led the motion, said banks in Nigeria no longer dispense these lower Naira denominations with the excuse that they hardly receive them from the Central Bank of Nigeria (CBN).

He said, "The senate is disturbed that the lower denominations are printed and procured outside the country with the attendant economic and security implications. It is significant that the denominations that were skipped are those printed on polymer paper by printers outside the country's shores, even when there are no marked differences between the polymer paper and the traditional currency paper.

"Whereas all developed countries operate with coins, a developing country like Nigeria is not, even when there are glaring disadvantages from the absence of coins for routine transactions in the country."

Nwaoboshi added that if the situation is not remedied urgently, it may lead to a total collapse of the economy.

play CBN Governor Godwin Emefiele (File)

 

Another lawmaker, Magnus Abe, an APC member from Rivers state said Nigerian traders have taken advantage of the situation to raise prices of goods.

"When it continues to be part of our legal tender and they are unavailable, it becomes an indirect way of pushing up the prices of commodities.

"If a trader knows that they are to give you change of N5 or N10 and that change will never be available, they will simply plan their prices to the next round figure. That will in the long term drive up prices in the economy," he said.

Sam Anyanwu, Imo-PDP, said the cause of the scarcity stems from the decision of Nigerian government to print currencies abroad.

"I’m a member of the committee on banking and financial institutions and we visited the printing and minting company of this country. When we got there, we discovered that what was in production is the N1,000 and N500 notes and we asked questions. Why is it the N50, N20, N10 were not in circulation? But that (printing of N1, 000 and N500) was what was given to them as contract from CBN. I think that we have a competent company in printing and minting and they can do the production for this country. So, I think it’s important that the senate takes this very serious.

"The reason why the production of these currencies is very expensive is because Central Bank prints this money outside this country when we have a capable company that can do it here."

The deputy senate president, Ike Ekweremadu, who presided over the session, said it is not only a Nigerian problem but some African countries too are experiencing the same issue.

Ekweremadu said, "One of the issues that is affecting lack of lower denominations is the haste in which we introduce higher denominations in Africa. It’s not just a Nigerian thing because if you go to Ghana, you’ll see denominations rising as much as N10, 000 and CFA, which is the one they use within the French speaking people of West Africa has about a 100, 000 bill and that (has) spread also to South Africa. With that kind of level of higher denominations, it affects the production and acceptance of the lower denominations. That is the area we need to begin to look at."

Advent of Naira

The West African Currency Board was responsible for issuing currency notes in Nigeria from 1912 to 1959.

Prior to the establishment of the West African Currency Board, Nigeria had used various forms of money including cowries and manilas.

On July 1, 1959 the Central Bank of Nigeria issued the Nigerian currency notes and coins and the West African Currency Board notes and coins were withdrawn.

It was not until July 1, 1962 that legal tender status was changed to reflect the country's new status.

The notes were again changed in 1968 as a war strategy following the misuse of the country’s currency notes.

On March 31, 1971, the then Head of State announced that Nigeria would change to decimal currency as from January, 1, 1973.

ALSO READ: CBN threatens Nigerians with jail time for abusing naira notes

The major currency unit would be called Naira which would be equivalent to ten shillings: the minor unit would be called kobo; 100 of which would make one Naira.

The decision to change to decimal currency followed the recommendations of the Decimal Currency Committee set up in 1962 which submitted its report in 1964.

The change that took place in January, 1973 was a major one and this involved both currency notes and coins.

The major unit of currency which used to be £1 ceased to exist and the one Naira which was equivalent to 10/- become the major unit:

On February 11, 1977, a new banknote denomination of the value of 20 Naira was issued.

This was special in two respects - the N20 banknote was the highest denomination to be introduced then, and its issue became necessary as a result of the growth of incomes in the country; the preference for cash transactions and the need for convenience.

The N20 banknote became the first currency note in Nigeria bearing the Portrait of a Nigerian citizen, in this case, the late Head of State, General Murtala Muhammed (1938-1976) who was the torch bearer of the Nigerian Revolution July, 1975.

He was declared a national hero on the October 1, 1978.

The note was issued on the 1st Anniversary of his assassination as a fitting tribute to a most illustrious son of Nigeria.

On July 2, 1979, new currency notes of three denominations, namely, ( N1), (N5), and (N10) were introduced.

In response to expansion in economic activities and to facilitate an efficient payments system, the N100, N200, N500, N1000 were introduced in December 1999, November 2000, April 2001 and October, 2005 respectively.

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