In major markets, worsening inflation is driving prices of goods away from the lower denominations of Naira currencies. Not long ago, a sachet of pure water cost N5, and N20 was a common “settlement” currency at police checkpoints. However, in recent years, these denominations have struggled to maintain their purchasing power.
Despite these challenges, the Central Bank of Nigeria (CBN) recognizes specific denominations, including coins like 50 kobo, N1, and N2, as well as polymer-based notes like N5, N10, N20, and N50. However, the prices of everyday items have risen significantly. A sachet of pure water now sells for N30, retail sugar no longer for N10, and candies like Tom Tom are paired for N50. Moreover, rounding prices to the nearest 50 or 100 further diminishes the relevance of these currencies.
Over the past six months, the Naira has significantly depreciated, stabilizing at around N1050 to a dollar from its peak of N1,900. This depreciation has devalued Nigeria’s highest denomination of N1000 to less than a US dollar. Even owning $1000 makes one a millionaire in Naira, while $1 surpasses N1,000.
Despite the Naira’s recent uptick, there are no substantial indications of decreasing goods prices. Analysts attribute Nigeria’s inflation to various factors, including foreign exchange fluctuations. Despite this, the government continues to produce lower denomination currencies, incurring significant costs.
In 2016, the CBN temporarily halted printing N5, N10, N20, and N50 notes due to high production costs. Each lower denomination note costs N1000 to print because the Nigeria Security Printing and Minting plc (NSPM) lacks polymer printing capabilities. Experts urge the CBN to cease lower denomination production and reassess the currency.
Economist Abiodun Ayangbemi emphasizes the need to halt lower denomination production, stating they no longer fulfill basic money roles. Similarly, monetary policy expert Lekan Olaleye urges a re-denomination strategy like Ghana’s 2007 currency reform.
Former CBN Governor Sanusi Lamido’s 2012 proposal for N5000 notes and lower denomination coins remains unfulfilled, with prices now surpassing 2012 levels.
