Across major markets, prices of goods are moving away from the lower denomination of the Naira currency as inflation bites harder.
Not too long ago, a sachet of pure water cost N5, while N20 gained popularity as the denomination used to “settle” police officers at checkpoints, the Daily Post reported.
However, in the past couple of years, these notes have struggled to find items they could be attached to.
A market survey showed that more than half of Nigeria’s legal tenders cannot make purchases.
Despite this, the Central Bank of Nigeria, CBN, recognises the following denominations: 50 kobo, N1, and N2, which are coins; and N5, N10, N20, and N50, which are printed on polymer materials.
A sachet of pure water now sells for N30. Retailed sugar no longer commands a price of N10, while candies such as Tom Toms now retail at two pieces for N50. Goods now round up to 50 or 100, further compounding these notes’ woes and rendering these currencies irrelevant.
In the past six months, the naira has depreciated considerably. At one point, it was about N1,900 to a single dollar until the intervention by the CBN, with the naira now trading at about N1050 to a dollar.
The implication of it is that the N1000, which is Nigeria’s highest denomination, is less than a single dollar.
According to the current exchange rate, anyone with $1000 is a millionaire in naira, and anyone with $1 has more than N1,000.
Despite the recent surge in the value of the naira, prices of commodities have not shown any significant signs of climbing down.
Experts believe that Nigeria’s inflation is a product of many factors, with FX being one of the numerous factors.
But despite this, the Nigerian government is still printing some of the lower-denomination currencies at a huge cost.
According to reports, in 2016, CBN had to temporarily halt the printing of N5, 10, N20, and N50 due to the cost of production.
It costs N1000 to print each lower denomination because Nigeria Security Printing and Minting plc (NSPM) is unable to print on polymer, report revealed.
Now experts are calling on the CBN to discontinue the printing of the lower denominations and review the currencies in line with reality.
Abiodun Ayangbemi, an economist, said that the CBN must discontinue the printing of the lower denomination because the majority of those currencies have failed the basic principles of money—means of exchange and store of value.
“The monetary authorities cannot continue to print those denominations when there is basically nothing to use them for,” he said.
Lekan Olaleye, a monetary policy expert, asked the federal government to take a copy of the re-denomination policy adopted by Ghana some years ago.
He argued that the CBN should remove two zeros from the existing notes.
It would be recalled that Ghana had, in 2007, re-denominated the cedis by striking out four zeros from their currency and producing the new Ghana cedis.
A former CBN governor, Sanusi Lamido, announced in 2012 a plan to introduce N5,000 notes. In the same vein, there was also a plan to coin the lower bank notes of N5, N10, and N20.
However, the policy was met with a strong outcry from the public, which condemned the plan. Thus, the government shelved the plan.
Years after the botched plan, prices of goods and services have spiked beyond the 2012 level.
