As inflation tightens its grip, the lower denominations of the Naira currency are losing their purchasing power across major markets.
Gone are the days when a mere N5 could fetch a sachet of pure water or N20 could smooth the path through a police checkpoint.
Recent years have witnessed these once-significant notes struggling to find items they could adequately buy.
A recent market survey conducted by DAILY POST reveals a stark reality: more than half of Nigeria’s legal tender is insufficient to make meaningful purchases.
Despite this glaring issue, the Central Bank of Nigeria (CBN) officially recognizes denominations such as 50 kobo, N1, and N2 in coins, along with N5, N10, N20, and N50 printed on polymer materials.
The repercussions of this inflationary surge are palpable. A sachet of pure water now commands a price of N30, while commodities like sugar, once retailed for N10, have seen their prices skyrocket.
Even candies, such as Tom Tom, are now sold in pairs for N50. Furthermore, the trend of rounding prices up to the nearest 50 or 100 exacerbates the devaluation of these smaller denominations, rendering them increasingly irrelevant in daily transactions.
Over the past six months, the Naira’s value has depreciated significantly. From a high of around N1,900 to the dollar, it now trades at roughly N1050 to a dollar, highlighting a drastic decline.
In this context, Nigeria’s highest denomination, the N1000 note, is now worth less than a single dollar. A stark contrast emerges: while holding $1000 makes one a millionaire in Naira, possessing a mere $1 equates to over N1,000.
Despite interventions by the CBN aimed at stabilizing the Naira, commodity prices remain stubbornly high.
Experts attribute Nigeria’s inflation to a myriad of factors, with foreign exchange (FX) fluctuations playing a significant role.
Amidst these economic challenges, the Nigerian government continues to print lower denomination currencies, albeit at a considerable cost.
Reports indicate that printing each lower denomination note costs N1000 due to limitations in polymer printing technology at the Nigeria Security Printing and Minting plc (NSPM).
Calls for action grow louder as experts urge the CBN to halt the production of lower denominations and reassess the currency in line with economic realities.
Abiodun Ayangbemi, an economist, emphasizes that these currencies fail to fulfill the fundamental principles of money as a medium of exchange and a store of value.
Meanwhile, monetary policy expert Lekan Olaleye advocates for a re-denomination strategy similar to Ghana’s successful initiative in 2007, which saw the removal of four zeros from their currency, streamlining transactions and boosting confidence in the monetary system.
The Nigerian government had previously entertained the idea of introducing N5000 notes and coining lower denominations like N5, N10, and N20.
However, public outcry led to the shelving of these plans.
Yet, as prices continue to soar beyond the levels of 2012, the need for decisive action becomes increasingly urgent in addressing the challenges posed by inflation and the dwindling value of smaller denominations.
