Nigeria’s most valuable currency note, the N1,000 bill, has dramatically lost its purchasing power. Once a significant sum, it now feels like mere loose change in daily transactions.
A new economic analysis strongly urges the Central Bank of Nigeria (CBN) to take immediate action: introduce N10,000 and N20,000 notes. This move would restore convenience and drastically reduce the skyrocketing costs associated with handling cash.
Titled, “Is Africa’s Eagle Stuck or Soaring Back to Life?”, the study warns that the naira’s rapid freefall has crushed its everyday usefulness. The N1,000 note, launched in 2005 at a value near $7, now buys less than 60 US cents. This represents a brutal drop in real value over two decades.
Why Higher Denominations are Necessary
Financial experts emphasize that introducing larger bills is a matter of economic practicality, not merely printing more money. The necessity is driven by core issues affecting commerce:
- Loss of Portability: Market traders, rural buyers, and artisans must now haul thick, inconvenient wads of cash for simple transactions. A few high-value notes would replace these bulky stacks.
- Sky-High Operational Costs: The CBN incurs massive expenses producing, transporting, and securing low-value bills. These notes also wear out quickly, increasing waste.
- Inflationary Reality Check: The cost of essential goods proves the currency’s depreciation. For instance, in 2005, 1kg of imported rice cost ; today it costs . A Lagos-Abuja flight jumped from to over .
A N5,000 note proposal made in 2012 would now require a denomination of to match the same buying power. This clearly illustrates a 94% plunge in the naira’s strength.
Busting the Inflation Myth
Many Nigerians fear that issuing larger notes will trigger price hikes. However, the report firmly debunks this as a myth.
“Inflation comes from rising costs or excess demand not bill size.”
Countries worldwide issue larger denominations after their currency weakens, not as a cause of inflation. Therefore, the introduction of higher-value notes is a fix for current depreciation, not a trigger for future price instability.
Modernizing Currency for Economic Flow
The debate is not new; a note was proposed over ten years ago but withdrawn due to public opposition. Today, the economic case for modernization is compelling.
New high-value notes, or even a full currency redenomination, would yield immediate benefits:
- Speed up transactions for businesses.
- Lower CBN operational burdens and waste.
- Align Nigeria with the currency practices of other growing economies.
Outside major cities and banking halls, cash still dominates trade. Carrying “bricks” of naira slows commerce and hinders growth. A portable, efficient naira supports traders, cuts waste, and boosts overall economic flow.
Will the CBN finally address the issue? Share your thoughts: Should Nigeria embrace and notes to modernize its currency?
