#Bring back our coins
Senate recently directed the Central Bank of Nigeria [CBN] to reintroduce coins to the economy in order to cater for “highly repetitive transactions.” Senate’s resolution was the outcome of a motion sponsored by Senator Mustapha Bukar [APC, Katsina South]. Bukar had told Senate in plenary that according to CBN, banks and traders were a stumbling block to the re-introduction of coins as they rejected circulation of same to the general public, even as such coins are legal tender.
Bukar quoted CBN as saying there are eleven currency denominations comprising eight bank notes and three coins, all of which are legal tender in the country. The eight currency notes are N1,000, N500, N200, N100, N50, N20, N10 and N5 while the coins are for 50k, 10k and 1k. He recommended that since the three coin currencies have lost their market value due to inflation, the lower denomination notes should be converted to coins to facilitate daily transactions as is the case in other countries. Immediate candidates for this conversion are the N20, N10 and N5 bank notes.
Amplifying his case, Bukar said there are two types of retail payments in Nigeria, namely the highly repetitive small value transactions and the less frequent high value transactions which involve items of more durable nature. He said all over the world, coins are most suitable for the low value and more repetitive transactions due to the circumstances under which related transactions are conducted such as crowded market places, bus stops and sundry adverse weather conditions. He then recommended that the country adopts the return of coins as soon as possible.
We support this far reaching motion by Senator Bukar and commend the Senate for falling on the same page with him. Seen in context, the absence of coins in the Nigerian economy has imposed many deleterious effects that cannot be over emphasised. On a daily basis citizens have to contend at Automatic Teller Machines (ATM) and bank counters with the non-availability of small bank notes with which to carry out routine transactions. The situation is worsened by the fact that CBN has in turn been contending with the challenge of producing currency notes at a rate that matches the demand for same, due to rising cost of the minting.
The situation is not helped by the high rate of wear and tear of currency notes, which led the CBN to introduce hybrid plastic notes some years ago. It is believed that it costs as much as N20 to print a single N5 denomination currency note, even as the country prints her currency notes abroad with telling effect on the country’s foreign exchange earnings. These factors along with others make the continued dependence on currency notes an unsustainable exercise in both the short and long runs.
Beyond issue of scarcity is the growing concern over the vitiation of the integrity of the Nigerian currency through massive forgeries. It was recently revealed by CBN that as much as 30% of bank notes circulating in the country may be forged. This scary scenario is possible due to the recent advances in printing technology and the relative ease of printing currency notes by unscrupulous private individuals.
In the light of the foregoing lies the imperative for CBN to align with Senate and reintroduce coins as soon as possible, as to delay the exercise is to postpone the evil day. Also to be considered is the possibility of re-denominating or redecimalisation of the naira to bring all denominations including the lowest unit, into the regular transaction cycle. Beyond the foregoing is the need for CBN to launch a sustained advocacy for a new currency regime that conforms to the expectations of the general public and not the whimsical preferences of banks and a few traders.