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24 May 2017

Lower Naira Notes To Be Changed To Coins,According To Senate

The Central Bank of Nigeria should convert the
country’s lower currency notes into coins to facilitate “highly repetitive” retail transactions,
the Senate said Tuesday.

The advice came
after a Senator spoke on the implications of rejection of the existing coin denominations for
the economy.

“The local retailers keep rejecting the coins
because commercial banks won’t accept them
as deposit, even when they are reflected on paper, and the CBN still recognizes them as
legal tender,” said Mustapha Bukar, the APC
Senator representing Katsina South.

Given the rejection, plus the loss of value of
the coins due to inflation, Mr. Bukar, therefore,
suggested conversion of the the lower notes
into coins to “cater for highly repetitive
transactions” which “overwhelming majority” of
Nigerians are engaged in due to “location and income”.
“Since the three coin denominations of 50 kobo,
one kobo and 10 kobo have lost their values due
to inflation, the conversion of lower currency
notes to coins will facilitate retail transactions
in the economy, like we have in developed
countries,” the senator said.
“Despite the huge budget by the CBN on
sensitising Nigerians on the need to accept
coins, the transaction chains were broken and
banks and customers reject the currency, thus,
promoting corruption and escalating inflation to
the extent of diminishing the value of the
Quoting unnamed “experts”, he said coin
denominations were important in helping control
devaluation of country’s currency. Taking an
instance from the U.S.A, he said a reason why
one cent had not phased out “is due to
inflationary ramifications of such a move”.
He observed that coins were still being used in
advanced countries, including the United
Kingdom, Japan, the European Union and the
United Arab Emirates, but lamented Nigeria has
now become the only country in West Africa
“where there is a total absence of the coins in
the economy.”
“In Nigeria, there are two types of retail
payments; the highly repetitive small value
transactions, such as urban transportation,
sweets, cigarettes, kola nuts, sachet water,
vegetable etc., as well as, less frequent but
high value transactions like clothing, footwear,
raw foodstuff, electronics etc.
“Coin currencies are designed globally to cater
for highly repetitive transactions because of the
nature and conditions under which they happen,
such as crowded markets, bus stations,
congested traffic, and varying weather
conditions, including rainy, sunny and humid
conditions in which notes are ill-suited for them.
“Countries regularly upgrade their coinage to
keep pace with the prices of this category of
retail items,” Mr. Bukar explained. Following the
motion, the Senate, led by Ike Ekweremadu,
resolved to urge the CBN to intensify efforts to
bring coins back to the economy; and convert
lower currency notes into coins to be used
“side-by-side with the notes” to facilitate highly
repetitive retail transactions in the country.
The Senate also urged the CBN to impose
sanction on any commercial bank that rejects
coins as deposit. Nigeria’s current currency
notes are: N5, N10, N20, N50, N100, N200,
N500 and N1000. Mr. Bukar did not mention exactly which ones he defined as “lower notes”.

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