The House of Representatives has urged the Central Bank of Nigeria to strengthen the use of coins as legal tender and ensure that banks adhere to the use of coins to the fullest extent possible. The Reps told the CBN that the use of coins could “stabilize” inflation.
This follows the plenary acceptance of a motion proposed by Honourable Muda Umar of Bauchi. Umar highlighted that despite the Federal Government’s large budgetary investment in the creation of coins as legal currency, the coins appear to be extinct at present.
Nigeria’s inflation rate changed direction in February as it rose 15.7% from 15.6% recorded in the previous month. This represents a 0.1% point increase compared to the rate recorded in January 2022.
What the Rep is saying
Muda Umar was concerned about artificial inflation caused by the none use of coins. He said, “business transactions of ordinary Nigerians have been significantly affected as the lack of coins and other lower denominations have resulted in prices being summed up to the nearest Naira equivalent, a situation that can best be described as inflation in economic terms.
“Worried that while other countries make use of coins for their daily financial transactions, the Nigerian coins comprising 50kobo, N1 and N2 have not been fully utilized in that regard.”
He said that the increase in the use of coins could help stabilize inflation. “Injecting low denominations and coins into the economy will go a long way in curbing price inflation and stabilizing the economy,” he said.
The House, while adopting the motion, mandated the Committee on Banking and Currency to ensure compliance.
What you should know
- The Central Bank of Nigeria had mentioned the use of Kobo as a core challenge in their Annual Report 2020 as compiled by the CBN’s Currency Operations Department.
- The bank said, “Other constraints are public apathy to the usage of coins and continued involvement of the Bank in retail cash processing and distribution.”
- The CBN also stated that the “Conduct of public awareness campaign to enlighten the public on the basic security features, proper handling of the banknotes and usage of coins in the economy”.
- The Currency Operations Department (COD) executes this mandate through coordination of the printing and distribution of banknotes and coins, as well as the procurement and distribution of foreign currency.
- Currency in circulation in Nigeria rose by N1.15 trillion in 2021 to N3.33 trillion as of December 2021 its highest level on record. This is on the back of several monetary policies adopted by the Central Bank of Nigeria to increase liquidity in the economy.
- The Central Bank of Nigeria (CBN) also stated that the volume of counterfeit currency in circulation dropped from 84,934 pieces in 2019 to 67,265 pieces of fake notes in 2020, representing a 20.80% decrease. The nominal value of the 84,934 pieces is N64.71 million, while the nominal value of the 67,265 pieces is N56.83 million, representing a 12.18% decrease in value.