WRITTEN BY PROF. ANTHONY EZE
In apparent response to traders’ persistent lamentation over the scarcity of lower denominations of the national currency and its adverse effects on trade,
the CBN has commenced the process of flooding the market with these denominations of the currency. It is a most welcome development which should have come earlier.
We are glad, however that the Apex Bank has finally responded to this call for a redress in the market with regards to the difficulties traders and other users of the currency face with the shortage of the lower denominations of the currency.
As part of its sensitization programme on the exercise, the CBN Director of Currency Operations, Mrs Priscilla Eleje, was at the Wuse Market in Abuja recently to kick-started the national rollout of the lower denominations of one hundred naira, fifty naira, twenty naira, ten naira and five naira notes. The plan is to make the notes easily accessible to the end users, especially traders through their market associations and Banks. It is instructive that the CBN recognizes the communication gap that existed in the past and is ready to bridge this now by engaging the traders and getting direct feedback.
The absence of this, in the past, was one reason the scarcity of the lower denominations persisted to the detriment of the economy. Privileged persons and their collaborators ran hoarding rings with the lower denominations which they resold for huge profits. Those involved in these rackets can be seen at public places like markets, motor parks, social event venues, and sometimes, in the Bank premises.
Time was in the past, when these lower denominations were hugely available and distributed. Apart from the naira notes, the national currency was also denominated in coins. The last exercise was in February 2007 when the fifty naira, twenty naira, ten naira and five naira notes as well as the one naira and fifty kobo coins were reissued and a new two naira coin was introduced. It is very important for the health of any economy that these lower denominations are widely circulated. The absence of these lower denominations has tended to fuel inflationary spirals as goods and services can only be priced in currencies that are in circulation.
The disappearance of the coins in our currency units, for example, also marked the seeming disappearance of goods and services that were priced at such lower values. Goods such as sugar, biscuits were no longer bought with kobo coins.
The pressure is more today on the five naira note, which is hardly available in the market. If something was not done to stymie this ugly trend, the consequences would be that, before long, no goods and services would be priced for anything less than ten naira. Such a situation will be unacceptable.
But, now that sanity is about to be restored, we advise the CBN to make sure that the entire country is covered in the rollout plan of the lower denominations of the currency. Apart from reducing the unnecessary pressures on the higher currencies, it would make trade and commerce a pleasant exercise for all the stakeholders involved. In fact, there is hardly any citizen who is not affected by the prolonged scarcity of the said denominations.
Business transactions, at times, take long hours because of lack of lower denominations of the currency. We believe that the massive circulation of the lower denominations will drastically address this challenge.