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Lower Denominations May be Changed to Coins

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.”

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