Inflation in Nigeria bites harder, renders N20, N10, N5 ‘irrelevant
By Ibrahim Umar
Kanempress News
16th April 2024
Reports by Kanempress show that across major markets, prices of goods are drifting from the lower denomination of the Naira currencies as inflation bites harder.
Recently, a sachet of pure water cost N5, while N20 became a popular currency as the denomination used to “settle” police officers at various checkpoints.
However, in the past couple of years, these lower currency notes have strived to be used in purchasing commodities as they could be attached to.
A market survey conducted by Kanempress revealed that over half of Nigeria’s legal tenders cannot make such purchases of commodities.
Despite this, Nigeria’s Apex Bank, the Central Bank of Nigeria, CBN, recognizes the following denominations; 50 kobo, N1 and N2 which are coins, and N5, N10, N20 and N50, which are printed on polymer materials.
Currently, Kanempress recall that a sachet of pure water now sells for N30.
Even commodities such as retailed sugar no longer sells for N10, while candies like Tom Tom are retailed at two pieces for N50.
To further butter the points above, prices of commodities are now rounded up to 50 or 100, which further makes 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 Apex Bank with the naira now trading at about N1050 to a dollar.
The implication of it is that N1000, which is Nigeria’s highest denomination, is less than a single dollar.
Anyone with $1000 is a millionaire in naira based on the current exchange rate, and anyone with $1 has over N1,000.
Despite the recent surge in the value of 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 foreign exchange 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 further research, in 2016, the Apex Bank had to temporarily halt the printing of N5, 10, N20 and N50 due to the cost of production.
The report, gathered by Kanempress said it costs N1000 to print each lower denomination because Nigeria Security Printing and Minting plc (NSPM) is unable to print on polymer.
Now, experts are calling on the CBN to discontinue the printing of the lower denominations and review the currencies in line with realities.
While speaking with Kanempress, an economist, Abiodun Ayangbemi said that the Central Bank of Nigeria 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,” Ayangbemi said.
A monetary policy expert, Lekan Olaleye asked the federal government to take a copy of the re-denomination policy adopted by Ghana some years back.
Olaleye argued that the Central Bank of Nigeria should remove two zeros from the existing notes.
Kanempress 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 had in 2012 announced a plan to introduce N5000 notes. Similarly, 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, who 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.
