The Source Magazine Online

...News from the depth, rooted in time

		Search Fo r
		Search Fo r

HOME

ARCHIVES

SUBSCRIPTION

ADVERT RATES

ABOUT US

FEBRUARY 26, 2007 VOL. 20. NO 20

Reforming the Naira

Professor Charles Soludo, CBN Governor, Nigeria

The Central Bank of Nigeria (CBN), restructures the Nigerian currency, as it re-introduces coins and redesigns some denominations of the national currency, the naira
By Udo Onyeka
By February 28, 2007, Nigerians will begin to transact business with currencies other than the ones they are used to. The changes, which forms part of the efforts by the Central Bank of Nigeria (CBN), to restructure the banking sector, is in line with the promise made by the CBN governor, Professor Chukwuma C. Soludo, when he assumed office in 2004, to the effect that the restructuring in the sector would be “total and all-embracing”.
Apart from restructuring the currency, there are other significant changes in the industry— all aimed at positioning the financial institutions in the country for the challenges ahead. Some of these changes includes the re-capitalisation of banks operating in the country to the tune of N25billion and above, foreign exchange liberalisation, e-FASS monitoring and supervision of banks, introduction of new code of corporate governance and, establishment of Microfinance Bank (MFB), among others.
The Source gathered that following a comprehensive review of the currency structure in 2005, the CBN carried out a redesign of the coin series along with the lower denominations of the bank notes (N5, N10, N20 and N50).
The purpose of the redesign, a CBN source said, was to reduce the weight and size, enhance the value and aesthetic of the coins to ensure portability and promote payment convenience. The redesigned coin denominations, which will be introduced with the new notes on February 28, are 50k, N1, and N2.
The Source, was told that apart from improving on the old security features on the notes, there are introduction of new features. For instance, the denominations are translated into Hausa, Igbo and Yoruba for easy identification. The notes are now smaller in size, have no N sign, and the N20 note is made of polymer, which is plastic in nature. A release by the Central Bank of Nigeria (CBN) and made available to The Source, showed that on the front side of the notes, the existing portraits are retained. There is also the introduction of a special symbol at the top left corner, providing a distinctive feel for the blind to assist in recognising the denominations, as well as a vertical and horizontal serial numbering.
On the back of the notes, the specimen showed that the existing portraits on the 5 and 10 Naira are retained, while the new 20 Naira note has the portrait of Ladi Kwali, a famous potter. The 50 Naira note has the portrait of fishermen.
Other features on the notes, the release said, include the iridescent band, a subtle shiny stripe running down the front of the N50 note. In the watermark, the eagle is replaced with CBN logo and the letters ‘CBN’ in a vertical format which can be seen more clearly when the notes are held against light.
“The watermark on the 20 naira is replaced with a clear window which is a transparent part of the note in the shape of CBN logo, and can be seen by looking from either side of the note. The letters ‘CBN’ in a vertical format are adjacent to the window and are clearly visible from both sides of the note when held against light. On the 20 naria note, there is an oval-shaped, green coloured area in the lower part of the widow and as the note in tilted, the colour changes from green to gold.
“For the new coins, the N2 and N1 coins are bi-metallic, while the N1 coin retains the portrait of Herbert Macaulay, a foremost nationalist, the N2 coin has the portrait of the National Assembly on it, symbolising our democracy.
“The 50 kobo coin has one colour and retains the cobs of maize, depicting agriculture and the Nigerian Coat of Arms appears on the back of all the coins, the CBN release said.”
The Source was told that all is set for the launch of the new currency and re-introduction of coins into the nation’s fiscal system. To make this possible, committee on logistics which has been meeting for this purpose since August, 2006 was empanelled. It was gathered that the procedure for exchange of the currencies have been worked out and common understanding established with the stakeholders, especially the banks. The procurement and supply of coin counting and satcheting machines, to facilitate exchange of coins to members of the public is also in place.
The Source was told at a meeting of the logistic committee on the introduction of the new currency, penultimate Tuesday in Lagos, that modalities for the exchange of the new notes and the coins have been put in place.
A CBN Deputy Governor, Dr. Shamslldeen Usman, told The Source that part of the arrangement for the circulation of the new currency was that banks have been instructed to make available two counters in all their branches for the exchange of the new currency. He said any one can walk into any bank to obtain the new currency, not minding whether such a person has an account with the bank or not.
The deputy governor said that a period of three months has been approved by the CBN, within which every one is expected to have exchanged the old currency with the new ones.
“Three months have been approved by the CBN for everyone to go and change the old currency to the new ones, Banks have been instructed to co-operate with the public in this regard so that the transition would be a smooth one, Usman said.
On the coins, Usman said some changes have been made to make it quite easy to carry and available always. “You know the new coin is very light and again the metal used for the new coin is a valueless one. So the temptation of people melting it is not there, because when they do so it is worthless,” he said.
The Source was told that the CBN would embark on a campaign to sensitise Nigerians on the advantages of using coins. “The CBN campaign is not only aiming at introducing the redesigned coins, but encouraging the public to collect their change in coins, however little the value”, a CBN source said.
According to the Director of Currency and Branch Operations, CBN, Ben Onyido, “Issuance and management of legal tender currency is a core function of the Central Bank. Currency management straddles the entire circle of currency issue, from the design, production and procurement, stocking, distribution, processing to the disposal and replacement of unfit and mutilated notes.
“Currency management varies from country to country, depending on the stage of economic development and development of the payment system.”
Onyido said that in recognition of the fact that Nigeria is a developing economy, where cash is the dominant payment instrument, the CBN more than ever before has woken up to this core function.
“According to Festus Odoko, Deputy Director, Corporate Affairs, CBN, “the Central Bank of Nigeria after a thorough review recognised the need for a comprehensive currency restructuring . The new notes can withstand prolonged usage and therefore minimises the need for replacement, thus resulting in lower cost of currency management”.
He said that for the reform endeavour to be successful through adequate supply, it became important to revamp the Nigerian Security Printing and Minting (NSPM) Plc, so that it can meet the printing needs of the CBN.
Odoko: “As you are aware, the CBN acquired the majority shareholding of 77 per cent in the NSPM in 2005, with the aim of reversing the fortunes of the company and transferring it into a competitive and profitable firm that will meet the currency and security document requirements of the Nigerian economy in the short term, and those of west and central Africa in the medium and long term”.
The Source gathered that as part of currency restructuring exercising, the CBN through the NSPM would begin to print the nation’s currency in the country. “The expenses involved in importing currency is becoming increasing high and the CBN governor is not comfortable with this development”, a CBN source volunteered.
Apart from the current introduction of new notes and coins in the system, investigations by The Source, reveals that since the inception of the CBN in 1959 there has been many changes and introduction of new currency.
The CBN issued Nigerian notes in the denominations of 5 shillings, 10 shillings, one pound in 1959, and on assumption of the Republic status by Nigeria, there was the re-issue of the country’s currency notes in 1963.
During the Nigerian Civil War (1967-70), there was a currency re-issue targeted at demonetising the Nigerian currency in the Biafra territory. In 1973, Nigeria decimalised its currency and replaced the pounds, shillings and pence with naira and kobo. The coin denominations were: 1/2k, Ik, 5k, 10k, and 25k, while the denominations of notes were 50k, N1, N5, and N10.
The N20 note was introduced in 1977 and in 1984, the colours of existing currencies were changed to demonetise money allegedly stolen by politicians and kept outside the banking system.
The N50 note was introduced in 1991 and in the same year, the CBN demonetised the 1/2k and 5k denominations of the coin and converted the previous 50k and N1 notes into coin.
The N100 note was issued in 1999 and the N200 note in November 2000.
Also, the N500 note was introduced in April 2001 while the release of the N1,000 note was in October, 2005.