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Scarcity of lower denomination naira persists

By BusinessNews Staff on March 9, 2014

While Nigerians continue to lament the scarcity of lower denomination naira in the system, Obinna Chima examines the health hazard posed by the dirty currencies largely in circulation in the economy

From Lagos to Kano, Anambra, Rivers States as well as the Federal Capital Territory, the story is the same as Nigerians continue to lament the scarcity of lower denomination of the naira. What you see in circulation are dirty, filthy and tattered notes that shame a nation. Apart from the clear health risk these dirty notes pose to the people who use them, the country’s national pride is greatly undermined in the eyes of the world.

Imagine paying for something, in clean 1000 naira notes and you are given change in dirty and disfigured 200 and 100 naira notes, you no doubt feel a sense of revulsion and anger, followed by immediate reaction.

These set of naira notes which are in short supply in the system include N5, N10, N20 and N50. These are all polymer banknotes which were introduced in 2007.

In fact, in public buses, markets and most business transactions in Lagos and some other cities in the country, “make sure you hold your change,” is now commonly heard.

The scarcity of the these set of naira notes which became obvious in last year, following the decision of the Central Bank of Nigeria (CBN) to change the polymer banknotes to paper money, has continued to make it very difficult for operators of micro-businesses, artisans and some other forms of businesses to effectively carry out their businesses.

The CBN had in the last quarter of 2013, announced plans to revert to paper banknotes before June this year. The move which was heavily criticized then, according to experts, is a policy switch that bucks the growing trend around the world for tougher polymer-based currency.

But a source at the central bank informed THISDAY yesterday that despite the suspension of Mallam Sanusi Lamido as the CBN governor, the apex bank would forge ahead with the conversion to paper money.

He maintained that the policy would not be a drain on the country’s finance.

The source at the central bank that preferred to remain anonymous said: “Nothing has changed, it was a monetary policy decision and I think we are going ahead with it.”

The Director of Communication, CBN, Mr. Ugochukwu Okoroafor had explained: “We only used polymer for N5, N10, N20 and N50, while N100, N200, N500 and N1, 000 are in paper form. We soon discovered that the polymer notes easily fade out because of our peculiar hot climate in Nigeria making them look tattered when in use over time.”

The CBN signed a deal in 2006 with Australia’s Securency International to print lower more-circulated units of the naira in polymer, while higher denominations were kept in paper form.

But seven years down the line and after an allegation that the manufacturer bribed foreign officials to secure contracts, including in Nigeria, the CBN said it was being forced to reverse the policy.

“What we have decided is to switch over to paper notes when we next want to print naira notes,” Okoroafor said.

“When the polymer notes in circulation become tattered and ready to be disposed of, we will start the printing of paper notes.”

The new paper banknotes would be printed locally by the Nigerian Security Printing and Minting Company rather than abroad, he had added.

However, findings had shown that polymer-based notes, which are in use in 23 countries around the world, including Australia, could last longer than traditional cotton-paper notes.

But the CBN said the decision was taken because of the public outcry about the poorer quality of some of the new currency in circulation.

Securency International was reported to have supplied 1.9 billion of its Guardian brand polymer-based notes to Nigeria between 2006 and 2008. In the wake of the bribery claims, the Reserve Bank of Australia sold its 50 per cent stake in the firm.

However, there are concerns that switching back to paper notes is a sign of a lack of a coherent policy.

Some Nigerians expressed disappointment over what they described as a policy summersault, wondering what becomes of the huge resources committed to the printing of polymer.

They also advised the central bank against embarking on the policy, describing the move as a policy summersault.

To a Lagos-based trader, Mr. Francis Neted, the scarcity of the lower denomination banknotes affects his daily sales negatively.

“You can’t keep a customer who comes to buy goods from you waiting because you don’t have ‘change,” he said.

Sanusi had at the last Bankers’ Committee retreat in Calabar, explained that as a result of the plans to redesign the naira last year, the CBN had stopped the production of the notes and gotten its printers to prepare to print the new notes.

“As a result of all the noise around the N5, 000 and coins, that process was stopped. Our printers now have to go back to the production of old notes. We have re-ordered for banknotes and I think they have started arriving and probably you would have seen some improvements on that by now,” he had said.

Nevertheless, while Nigerians lament the short supply of the lower denomination notes, some have continued to question the source of supply of mint currencies to hawkers always cited at major areas and ceremonies in Lagos.

“I think some bank officials and CBN workers fraudulently divert these currencies to street hawkers which is very unfortunate,” another resident of Lagos, Mr. Bayo Ayoade said.

Meanwhile, studies have shown that dirty money poses serious health hazard to those who handle it as trillions of such currencies in circulation are full of disgusting germs.

For instance, a study in the Journal of the American Medical Association studied bacteria from coins and notes found potentially harmful germs like fecal bacteria, E. coli and Staphylococcus aureus on 13 per cent of coins and 42 percent of notes.

A separate study by an Irish researcher at the Cork Institute of Technology(CIT), Emma Gabriel, that also tested banknotes for Staphylococcus Bacteria showed that 97 per cent of the sample notes tested positive for the presence of potentially dangerous bacteria on their surface. This may be even higher with the dirty and awful smell from most dirty naira.

“The five notes which tested negative were in mint condition, and the older the currency was, the more contaminated it was. The coins were less contaminated because they are made from bacteria-static metals,” the study revealed.

Furthermore, the study showed that dirty money could specifically pose a risk to immuno-suppressed people — people whose defense against bacteria are already low.

[This Day]

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