Inflation Renders N20, N10, N5 ‘Irrelevant’ as Prices Soar

The impact of inflation in Nigeria is becoming increasingly evident as prices of goods surge, making lower denominations of the Naira currency practically unusable.

Not too long ago, items like a sachet of pure water could be bought for N5, and N20 was commonly used to “settle” police officers at checkpoints. However, in recent years, these notes have lost their purchasing power.

A recent market survey conducted by DAILY POST revealed that more than half of Nigeria’s legal tender notes can no longer make meaningful purchases.

Despite the Central Bank of Nigeria (CBN) recognizing denominations such as 50 kobo, N1, and N2 coins, as well as N5, N10, N20, and N50 notes, the value of these denominations has significantly eroded.

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For instance, a sachet of pure water now sells for N30, while items like sugar and candies that used to be affordable with N10 are now sold for higher amounts. Goods are often priced in multiples of 50 or 100, further marginalizing these lower denominations.

In the past six months, the Naira has depreciated significantly, with the exchange rate reaching about N1,900 to a dollar at one point before the CBN intervened. Currently, the Naira trades at about N1050 to a dollar, making N1000, Nigeria’s highest denomination, worth less than a dollar.

Economists attribute Nigeria’s inflation to various factors, including the foreign exchange rate. Despite efforts to curb inflation, prices of commodities have remained high.

Experts are now calling on the CBN to discontinue the printing of lower denomination currencies and consider re-evaluating the country’s currency in line with current economic realities.

Abiodun Ayangbemi, an economist, argues that printing lower denominations when there is little use for them goes against the basic principles of money.

Lekan Olaleye, a monetary policy expert, suggests that the federal government should consider a re-denomination policy similar to what Ghana adopted in 2007, where four zeros were removed from their currency to simplify transactions.

While there were plans in Nigeria to introduce N5000 notes and coin lower denominations like N5, N10, and N20, these plans were shelved due to public outcry. However, years later, prices of goods and services have continued to rise, underscoring the need for a re-evaluation of Nigeria’s currency.