The Nigerian Senate has, on Tuesday, asked the Central Bank of Nigeria (CBN) to convert lower naira notes into coins in order to accommodate repetitive transactions in the country.
Mustapha Bukar (Katsina South senatorial district, APC), who moved the motion said according to the CBN, there are eight naira notes and three coins, most of which are rejected by banks and traders.
He cited examples of bigger economies like the US, UK, Europe, UAE who still use coins, and so, coins should not go into extinction in Nigeria.
“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, popularly known as pure water, vegetable etc., as well as, less frequent but high value transactions like clothing, footwear, raw foodstuff, electronics etc,” he said, according to The Cable.
“Coin currencies are designed globally to cater for highly repetitive transactions because of the nature and conditions under which they happen, such as crowded market place, 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 price of this category of retail items. Aware that an overwhelming majority of Nigerians engage in these transactions due to their income.”
“Worried that although the country’s currencies are in note and coin, indications are that coins are fast going out of fashion and into extinction.
“Research recently conducted by experts shows that in the early 90s coins were in use and considered good money in Nigeria and now it is the only country in the entire west African sub-region where there is total absence of coin in the total 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,” he added.
He suggested that “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”.
“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.”