CBN’s confirmation of 2013 as the takeoff date of the new currency profile seems to have jolted the nation and Nigerians who have unequivocally challenged the raison d’etre for the introduction of new notes and coins at a cost estimated at over N40bn. Critics have alleged that the amount could have been better utilised in correcting some of our severe social and infrastructural deprivations.
In the rest of this article, we will briefly examine the structure and cost of producing and promoting acceptance of the new currency range. We will also examine the fear that the introduction of the N5,000 note will instigate inflation.
The proposed N5,000 note sticks out like a sore thumb in the new currency profile; technically, currency profiles are universally structured along multiple steps of 1, 2, 5 &10, for both coin and note denominations. Surprisingly, in this instance, CBN leapfrogged N2,000 to adopt the N5,000 denomination; so far, no reason has been offered for this aberration.
In addition to the proposed six-denomination note profile, the N20, N10 and N5 denominations, will now join N2, N1 and 50k as coins. This presumably means an end to the extravagant polymer versions, which have not displayed the durable characteristics that CBN earlier promoted as its preferred quality. It is likely, however, that the new coin denominations would also suffer lack of patronage, just like earlier coin denominations, which were ultimately auctioned at less than a tenth of their value. The N20 denomination, in reality, can currently buy some pieces of ‘Tom Tom’ sweets, that is, those items normally priced at not more than two kobo when our highest naira denomination was N100; in other words, the low purchasing power of the new coin range will certainly, once again, lead to rejection. Continue reading