The scarcity of N100 notes across the country could be linked to a series of CBN policies.

In an interview with the News Agency of Nigeria (NAN), a number of people registered their displeasure about how N100 note and other lower denomination have become scarce in the country in recent times, and how this impacting on their businesses.

For instance, Mr Musa Haliru, a commercial bus driver in Gwagwalada, said he found it very challenging to give change to passengers whenever a N1,000 note is tendered for transport fares.

“This issue of smaller denomination is giving us problems at the garage when giving out change to passengers.
“The N100 notes in circulation are very old and dirty and the smaller denominations are hard to get.
“Small denominations like N100, N50 and N20 notes are scarce and not much in circulation these days.
“When passengers bring out N1,000 notes to pay for their transport fare, it becomes a problem finding change.
“If the government can print more of smaller denominations, I think it will reduce the difficulties we are facing at the garage,’’ Haliru said.

Similarly, motorcycle operators in Kuje Area Council described the situation as worrisome as they found it very difficult to give change to their passengers.

The Chairman of Kuje Traders Association, Mr Musa Umar, called on the CBN to print more of N100 notes and other smaller denominations to address the scarcity.

Why the scarcity?

The current scarcity of N100 and other lower denomination note could be tied to series of CBN policies, one of which is the cashless policy that aims to reduce the amount of physical currency circulating in the economy.

The policy has resulted to the adoption of POS machine and frequent usage of ATMs for transactions as against the tradition means of paying with cash.

This has drastically reduced the need to carry physical currency around in the economy and as such might have informed the decision of the CBN to reduce the amounted of smaller denomination currency minted.

Aside the cashless policy, there are some other factors that could be tied to the scarcity of N100 note in the economy.

The scarcity may be tied to the economics of Naira notes denominations. What this implies is that the CBN may have deliberately reduced the quantity of N100 notes minted because of the associated cost of minting.

That is, it makes good economic sense for it to print higher denominations because it would curb its spending on minting currency notes. It is cost efficient for the CBN to print more of N500 and N1000 notes than to print lots of N100 notes and other smaller denomination notes.

Printing those notes have a cost. To print them, the CBN has to pay for the paper, the security features, transportation and security while transporting them. And then the CBN is going to eventually make for destruction of these notes.

There is need to consider low-value transactions and retail sector players

Nevertheless, it is important that the CBN to consider the impact of this scarcity on retail sector growth.
According to a groceries seller, Mrs Helen Eze, “the issue of smaller denominations is becoming a problem to traders in the market, especially those of us that sell food items and perishable goods.

“Sometimes, when customers bring out higher denominations to buy something small, we normally do not sell to them because of change and we are the ones at a loss.

“We are pleading with the banks to make smaller notes available and save our businesses,” she said.

It is important that the CBN factor in the marketplace reality in the formulation of these policies. In reality, it is the items that people need to pay for with naira notes that should determine how much of the currency notes that should be made available in circulation per time.

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