Senate laments scarcity of lower denomination Naira notes

Nigerian Senate Chambers
Nigerian Senate Chamber used to illustrate the story.

The senate has expressed worry over the scarcity of lower denomination of Naira notes.

Members of the upper legislative chamber on Tuesday expressed concerns over the scarcity of N5, N10, N20, N50, N100 and N200 in the country.

The lawmakers noted that the scarcity poses a severe threat to the economy of the nation, which is just recovering from recession, as it is worsening inflationary trends.

The senate thereafter mandated its committees on Banking, Insurance and other Financial Institutions and Finance to investigate the scarcity and report back in two weeks.

Leading the motion, Peter Nwaoboshi, Delta-PDP, expressed worry that banks in Nigeria no longer dispense these lower Naira denominations with the excuse that they hardly receive them from the Central Bank of Nigeria, CBN.

He said, “The senate is disturbed that the lower denominations are printed and procured outside the country with the attendant economic and security implications. It is significant that the denominations that were skipped are those printed on polymer paper by printers outside the country’s shores, even when there are no marked differences between the polymer paper and the traditional currency paper.

“Whereas all developed countries operate with coins, a developing country like Nigeria is not, even when there are glaring disadvantages from the absence of coins for routine transactions in the country.”

He added that, if the situation is not remedied urgently, it may lead to a total collapse of the economy,

Magnus Abe, Rivers-APC, said Nigerian traders have taken advantage of the situation to raise prices of goods.

“When it continues to be part of our legal tender and they are unavailable, it becomes an indirect way of pushing up the prices of commodities. If a trader knows that they are to give you change of N5 or N10 and that change will never be available, they will simply plan their prices to the next round figure. That will in the long term drive up prices in the economy,” he said.

Sam Anyanwu, Imo-PDP traced the cause of the scarcity to the decision of Nigerian government to print currencies abroad.

“I’m a member of the committee on banking and financial institutions and we visited the printing and minting company of this country. When we got there, we discovered that what was in production is the N1,000 and N500 notes and we asked questions. Why is it the N50, N20, N10 were not in circulation? But that (printing of N1, 000 and N500) was what was given to them as contract from CBN. I think that we have a competent company in printing and minting and they can do the production for this country. So, I think it’s important that the senate takes this very serious.

“The reason why the production of these currencies is very expensive is because Central Bank prints this money outside this country when we have a capable company that can do it here.”

The presiding officer, Ike Ekweremadu, said the issue is not peculiar to Nigeria as other African countries have the same experience.

“One of the issues that is affecting lack of lower denominations is the haste in which we introduce higher denominations in Africa. It’s not just a Nigerian thing because if you go to Ghana, you’ll see denominations rising as much as N10, 000 and CFA, which is the one they use within the French speaking people of West Africa has about a 100, 000 bill and that (has) spread also to South Africa. With that kind of level of higher denominations, it affects the production and acceptance of the lower denominations. That is the area we need to begin to look at.”

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