As part of its currency review, the Central Bank of Nigeria (CBN) announced on Thursday that it will introduce 5000 naira denomination ( about $32) into the Nigeria economy by 2013.
Describing the design of the upcoming note, CBN Governor, Lamido Sanusi, said “we have chosen three Nigerian women involved in the pre-independence struggles. And at the back, we have the National Assembly, denoting democracy.”
The last comprehensive review of the country’s currency was carried out in 2005, which resulted in the introduction of the N20 polymer banknote, followed by the withdrawal of the N50, N10 and N5 bank notes in 2007, which were also converted into polymer banknotes in 2009.
However, as part of the new currency appraisal, the N1000, N500, N200, N100, N50 notes will be redesigned and upgraded for security purpose while the N20, N10, and N5 notes will be converted to coins. 50K, N1, N2 are also to be included in the coins category.
Sanusi adjudged that the usage of coins will curb inflationary pressures, enhance the quality of banknotes and promote the cash-less policy.
To encourage the use of coins in the Nigerian market, Sanusi said that the apex bank would liaise with the relevant ministries, departments and agencies of government, Deposit Money Banks, road transport workers, market operators, small businesses and supermarkets.
On the argument that the introduction of the new currency into the Nigerian market will spur inflation; Sanusi posits otherwise. He argued that countries like Singapore, Japan and Germany have higher bills of 10, 000 and they have not being weighed down by inflation.
“These denominations have relatively high dollar equivalent. The levels of inflation are, however, low at 2.8 percent, 1.1 per cent and -0.7 percent, respectively as of 2010. Furthermore, we believe that the introduction of a higher bill will complement the bank’s cash-less policy, as it will substantially reduce the volume of currency in circulation, particularly in the long term.”
Sanusi noted that the currency change is part of international practices that require monetary authorities to review their nations’ currencies at intervals of between five and eight years, to address weaknesses and other challenges.
According to him the change of the naira note which he called “Project Cure,” was aimed at upgrading the design of the entire range of currency denominations in order to enhance their quality and integrity, incorporate more effective features for the visually challenged, and introduce new security features on the redesigned banknotes.
He also stated that the currency change plan is done to achieve an optimal currency structure that will ensure cost effectiveness and balanced mix and utilisation of all the currency denominations; introduce new series of coins that will be generally acceptable for the purpose of transactions; and reducing the cost of production, distribution and disposal of banknotes by introducing higher bills that will reduce the volume and cost of banknotes in circulation.
Although Sanusi refused to state the cost implication of the new plan, he said that currency printers including the Nigerian Printing and Minting Company will be given equal chance to compete for the printing of the already designed note.
Giving a background to the project, the apex bank Governor stated that “The CBN carried out a review of the existing currency series in 2010. The exercise threw up several revelations and challenges such as the following: Public apathy towards the usage of the 50k, N1 and N2 coins, introduced in February, 2007; the varnished lower denomination banknotes failed to adequately meet expected longevity; and significant difficulties associated with the processing and destruction (briquetting) of the polymer banknotes.”
“In the light of the observed challenges, the CBN conducted several stakeholders’ in 2011 on currency restructuring to gauge public and independent perspectives on the existing banknotes and coin series.
“The issues raised and the subsequent findings and decisions were summarised as follows: due to inflationary pressures, the CBN should coin lower denominations of currency up to N100. The relevant denominations in this category are N5, N10, N20, N50 and N100; the need to encourage the usage of coins; and enhancement of the quality of banknotes.”
Sanusi stated that, “On November 28, 2011, the CBN board considered and approved the new currency series. It subsequently sought and on December 19, 2011, obtained the approval of President Goodluck Jonathan.”
CBN will be collaborating with the Currency Operations Department, the Nigerian Security Printing and Minting Company (NSPMC) and some international consultants on the new currency structure.
He however said that “There would be no urgent need for exchange of the old for the new bank notes by the general public for as long as the old banknotes are in circulation; they will remain legal tender.”