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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