New Naira Banknotes Circulation: History of Nigerian Currency

The newly redesigned Naira (N200, N500 and N1000) notes are set to begin circulation today, Thursday 15th, December 2022 through commercial banks.  The old notes are expected to circulate side by side with the new notes till 31 January 2023 when they will cease to be legal tender.  Currency redesign is one of the Central Bank’s mandates and is one in the history of Naira notes changes.  This redesign is aimed at mopping excess currency in circulation, which the central bank governor Godwill Emefiele said will help the financial regulator to curtail inflation, hoarding, fight counterfeiting of the currency, money laundering, armed robbery and ransom payment among others.  This is as the apex bank governor maintained that 85 per cent represents about N2.75 trillion out of N3.3 trillion in circulation in the country.

Ahead of today’s release of the new currency, the CBN had restricted cash withdrawals, over-the-counter (OTC), Automated Teller Machines (ATM) and the Point of Sale (PoS) to N20,000 and N50,000 for individual and corporate accounts respectively, for which the CBN governor was scheduled to appear before the House of Representatives today. We previously discussed the new CBN cashless policy in detail, where we pointed out individual careers and businesses that may be at risk of extinction if the policy is fully implemented.

Reports in both print and broadcast media show that the banks are ready to start distributing the new notes and are adjusting their ATMs to comply with the new CBN directive of having the lower denominations of the new notes in their machines.

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A Brief History of Nigerian Currency

The issue of the Naira redesign or currency changes is not a strange phenomenon for most adult Nigerians as the history of the Naira is full of it since the adoption of the Naira as legal tender in Nigeria in 1973. Since then several changes and redesigns have taken place over time. The Naira has undergone different changes, redesigns and re-issuance to date. It is the history of Naira change, redesigns and transformations, but we kept it short, simple and straight to the point because we are mindful of your time. The history of Nigerian currency and redesigns are as follows:

1973: In 1973 after the Nigeria-Biafra civil war, the Federal Government of Nigeria led by General Yakubu Gowon decided to change the country’s currency from metric to decimal. This resulted in changing the major unit of currency from pounds to Naira and Kobo. Naira as a currency was launched by Shehu Shagari, the then minister of finance. The CBN also claimed that the change was in an attempt to control the annual inflation rate and keep it below 10 per cent. However, by 1975 before General Gowon left office, inflation was 33.96 per cent.

1977: On February 11, 1977, the Central Bank of Nigeria (CBN) under General Olusegun Obasabhor introduced the N20 note, which was then the highest denomination at the time. The new Naira featured a portrait of the late Head of State, General Murtala Muhammed, who was regarded as a national hero for the numerous reforms he championed before being assassinated in.

1979: The 2nd day of July 1979 saw the introduction of the N1, N5, and N10 notes with engravings that reflect various cultural aspects of the country. This was done under the government of Shehu Usman Aliyu Shagari.

1984: In April 1984, the country witnessed the ‘Andrew version of the ‘Japa’ syndrome of today. The government of Major-General Muhammadu Buhari re-coloured (redesigned) the country’s banknotes except for the 50 Kobos with the same reasons advanced today: To curb currency trafficking common at the time. And the 50k and N1 were later changed to coins.

1999: At the return of democratic rule in May 1999, the government of General Olusegun Aremu Okikiola Matthew Obasanjo (rtd) quickly introduced N100 notes in December of the same year

2000: By November 2000 Obasanjo introduced the N200 banknote

2001: The following year in April, he introduced the N500 note, and

2005: By October 2005 introduced the N1000.

2007: February 2007 saw the reintroduction of 50k and N1 coins in a new design, while N20 was printed in polymer for the first time, but the N5, N10 and N50 were retained as paper notes. The coins were wildly rejected and consequently became extinct because many complained that they were too heavy to carry about.

2009: On September 30, 2009, the then Central Bank under President Umaru Musa Yar'adua converted the N5, N10, and N50 notes into polymer notes.

2010: In September 2010, the CBN issued the N50 polymer banknote.

2014: On December 19, 2014, Dr Goodluck Ebele Jonathan, president of the Federal Republic of Nigeria, launched a new N100 commemorative banknote to celebrate Nigeria’s 50th independent anniversary and 100 years of existence.

2022: on the 15th of December, the newly redesigned (recoloured) N200, N500 and N1000 banknote begins circulating.

Recommended reading:

1. The Challenge And Opportunity Inherent In Naira Redesign 2. CBN Vows To Curb Inflation As Buhari Unveils New Naira Notes 3. Types of Money And Opportunities They Present

Check it on Tradingview first

Conclusions

Currency redesign and issuance are some of the Central Bank’s mandates, and the 2022 redesign will definitely not be the last, as the law establishing the CBN allows it to do so. Whether they do it for the country's best interest without influence from the government of the day for political gains is a discussion for another day.

That is all for today. What do you think? Let's have your opinion on the Naira redesign and the history of changes in the Naira in the comments, and please don't forget to share this post.

Shalom!

konga.com

FAQs

How did the name "Naira" come about?

The name Naira was coined from the word Nigeria by Obafemi Awolowo.

Who introduced the current N100 banknotes?

The commemorative N100 banknote was introduced by the President, Dr Goodluck Ebele Jonathan and began circulation on Friday, December 19, 2014.

When did Nigeria change its currency to the Naira and Kobo?

In 1973, after the Nigeria-Biafra civil war, the Federal Government of Nigeria, led by General Yakubu Gowon, decided to change the country’s currency from metric to decimal. This resulted in changing the major unit of currency from pounds to Naira and Kobo.

When did Nigeria start using N200, N500 and N1000 banknotes?

In 2000 Considering cost-effectiveness and expansion of economic activities, higher denomination notes were issued. These are N200 notes in 2000. It was followed by the N500 note released in April 2001 and finally the N1000 note in October 2005.

Where is the Naira printer?

Naira notes and coins are printed/minted by the Nigeria Security Printing and Minting (NSPM) Plc and sometimes, other overseas companies, and issued by the CBN.

How does the CBN intend to fight inflation with the new Naira notes?

While responding to questions in a communique to the media at the monetary policy meeting held on the 22nd of November 2022, the governor said the central bank will reduce the volume of N500 and N1000 notes in circulation claiming the effort is aimed at curbing the inflation rate which he relatively blamed on the higher-denominated naira notes, sighting the UK as an example where the citizen only have access to the lower denomination of the pounds.

Why did CBN redesign the Naira notes?

The CBN Governor in his statement that the reasons for the redesigning of the N200, N500 and N1000 notes were to fight inflation, and counterfeiting as well as eliminate hoarding of the notes and ransom payment. The governor said that about N2.73 trillion out of N3.23 trillion, representing about 85% of the total money in circulation in the country is not in the banking system but that with the introduction of the new notes they intend to put hoarding of the naira in check, fight inflation, and counterfeiting as well as eliminate ransom payment. He believes that the significant hoarding of banknotes by members of the public has worsened the cash crunch being experienced in the country as well as the shortage of clean and fit banknotes with the attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting. Claims have kept experts and opinion makers sharply divided as to the real motives of the Nigerian government through the CBN to redesign the naira, it immediate, medium to long-term benefits and cost implications on the already heavily broadened Nigeria economy.

When will the new withdrawal limit take effect? 

The CBN policy on over-the-counter (OTP), ATM and PoS withdrawals will take effect from the 9 of January 2023, according to CBN.