The Central
Bank of Nigeria should convert the country’s lower currency notes into coins to
facilitate “highly repetitive” retail transactions, the Senate said Tuesday.
The advice
came after a Senator spoke on the implications of rejection of the existing
coin denominations for the economy.
“The local
retailers keep rejecting the coins because commercial banks won’t accept them
as deposit, even when they are reflected on paper, and the CBN still recognizes
them as legal tender,” said Mustapha Bukar, the APC Senator representing
Katsina South.
Given the
rejection, plus the loss of value of the coins due to inflation, Mr. Bukar,
therefore, suggested conversion of the the lower notes into coins to “cater for
highly repetitive transactions” which “overwhelming majority” of Nigerians are
engaged in due to “location and income”.
“Since the
three coin denominations of 50 kobo, one kobo and 10 kobo have lost their
values due to inflation, the conversion of lower currency notes to coins will
facilitate retail transactions in the economy, like we have in developed
countries,” the senator said.
“Despite the
huge budget by the CBN on sensitising Nigerians on the need to accept coins,
the transaction chains were broken and banks and customers reject the currency,
thus, promoting corruption and escalating inflation to the extent of
diminishing the value of the coins.”
Quoting
unnamed “experts”, he said coin denominations were important in helping control
devaluation of country’s currency. Taking an instance from the U.S.A, he said a
reason why one cent had not phased out “is due to inflationary ramifications of
such a move”.
He observed
that coins were still being used in advanced countries, including the United
Kingdom, Japan, the European Union and the United Arab Emirates, but lamented
Nigeria has now become the only country in West Africa “where there is a total
absence of the coins in the economy.”
“In Nigeria,
there are two types of retail payments; the highly repetitive small value
transactions, such as urban transportation, sweets, cigarettes, kola nuts,
sachet water, vegetable etc., as well as, less frequent but high value
transactions like clothing, footwear, raw foodstuff, electronics etc.
“Coin
currencies are designed globally to cater for highly repetitive transactions
because of the nature and conditions under which they happen, such as crowded
markets, bus stations, congested traffic, and varying weather conditions, including
rainy, sunny and humid conditions in which notes are ill-suited for them.
“Countries
regularly upgrade their coinage to keep pace with the prices of this category
of retail items,” Mr. Bukar explained.
Following
the motion, the Senate, led by Ike Ekweremadu, resolved to urge the CBN to
intensify efforts to bring coins back to the economy; and convert lower
currency notes into coins to be used “side-by-side with the notes” to
facilitate highly repetitive retail transactions in the country.
The Senate
also urged the CBN to impose sanction on any commercial bank that rejects coins
as deposit.
Nigeria’s
current currency notes are: N5, N10, N20, N50, N100, N200, N500 and N1000.
Mr. Bukar
did not mention exactly which ones he defined as “lower notes”.
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