Divergent views trail looming extinction of N5, N10 notes
As the naira faces devaluation crisis amid the current galloping inflation, N5 and N10 bills which are the lowest denominations have not only lost value but are also heading for extinction. Financial pundits have attributed the loss of value to unofficial phase off of the coins. The depreciation of the amounts comes with some economic […]
As the naira faces devaluation crisis amid the current galloping inflation, N5 and N10 bills which are the lowest denominations have not only lost value but are also heading for extinction. Financial pundits have attributed the loss of value to unofficial phase off of the coins. The depreciation of the amounts comes with some economic implications as it fuels inflation due to sellers’ tendency to intentionally increase prices of things that could be bought with the amounts. Daily Trust on Sunday takes a look at the depreciating purchasing powers of the notes and the looming extinction against the backdrop of divergent views on their integrity as legal tender.
Recall that the Central Bank of Nigeria (CBN) had attempted to strengthen their values when, in February, 2018, the nation’s apex bank initiated a programme on disbursement of smaller naira notes to traders in order to improve circulation of N5, N10 as well as N20 and N50 in the market.
Priscilla Eleje, the then Director, Currency Operations Department, had said that traders at Tejuosho Ultra-modern Market in Lagos, where the money was disbursed, would be entitled to N5,000 worth of the lower denominations weekly, which would be paid through their bank accounts. But three years later, inflation frustrated the effort with loss of the expected result.
Eleje said the development was a response to the inadequate circulation of the lower denomination banknotes.
Also, the CBN, in April 2021, had ordered Deposit Money Banks (DNBs) and Bureau De Change (BDC) operators to, henceforth, accept old and lower denomination U.S dollars as legal tender.
The apex bank gave the order in a circular signed by its Director of Currency Operations Department, Mr Ahmed Umar.
He said that the CBN would sanction any of the concerned stakeholders who refused to accept such denominations of the currency from their customers.
Daily Trust on Sunday’s findings indicated that though N5 and N10 denominations have significantly lost value, with some people calling for their phase off, the notes, which are still highly appreciated by some people, would not go into extinction soon.
Scores of people who spoke with our correspondents said that the denominations were still relevant because they could be used as a means of change during a transaction and if a number of them are put together and amounts to a reasonable amount. While some traders expressed disgust at the denominations being in circulation, others lament that they are not even enough to ease change palaver during transactions and the fact that they are still acceptable for transactions.
“Is N5 and N10 still in circulation?” This was the rhetorical question posed by Michael Azubuike, a trader at the popular Tejuosho Market, Lagos, when Daily Trust Saturday visited.
Azubuike’s question expresses surprise that the denominations are still in circulation despite that they have lost value, whereas they should have been phased off.
Many Nigerians also share in the feelings of Azubuike which are on the grounds that while nothing could be bought with N5 any more, it is only N10 that could buy pieces of candy, sweets, chewing gums while pencils, crayons, sharpeners and rulers sold at such prices go for higher prices.
A survey in the market and other market places showed that the two notes, especially N5, is almost out of circulation as people no longer accept them for business transactions.
Children no longer accept N5, N10
In Edo, some residents who spoke to Daily Trust on Sunday said children no longer collect N5 and N10 even as gift from parents and guardians.
“The other day when I came back from travel, I gave N10 each to the children that came to welcome me, but they refused to accept it, saying it can’t buy anything. I had to give them N50 which they collected,” Osahon Christian said.
Another resident, Sara Idemudia, said retailers no longer transact business with the two notes.
“Once you buy anything in the market that requires the seller to give you a change of N10, you will not get it, unless it is a provision shop that sells sweets,” she said.
She added that even N20 had started going into extinction due to loss of purchasing power.
In Bayelsa, residents expressed concerns that the two denominations could only buy little things. They added that they were only accepted in buying water as one bucket was sold for N10 in Yenagoa, the capital of oil-rich Bayelsa State. They expressed worries that due to the current inflation, commodities that used to be bought with the denominations had rapidly increased to higher prices so much that vendors now sell two buckets of water for N50.
“Residents are reluctant in accepting N5 or N10 because they will have to save up to N50 before they can buy anything useful with it,” a resident, Ernest Owafe said. He added that he had lost confidence in N5 and N10 as legal tenders.
“What can you buy with N5 or N10? Nothing. So, what will one be doing with the currency that is valueless in terms of exchange? I cannot even give them to my children to use as offering in the church because God deserves the best,” he said.
A trader at Swali Market in Yenagoa, Mrs Rita Kalu, said that the prices of things in the market did not encourage acceptance of N5 and N10 denominations.
“I don’t sell any goods for N5 or N10 here. So, how can I collect the notes? It’s been long since we don’t handle them here. In fact, the currencies have been outsmarted by the current reality of things in Nigerian markets,” she said.
“Even, government doesn’t use the money anymore. They are just there as legal tender. If government wants the denominations in circulation, they should regulate the prices of things and end inflation to ensure that N5 or N10 can buy something in the market,” she added.
A security guard who also runs a petty shop at one of the churches in Uyo, Akwa Ibom State, Mr Jimmy Hanson, confirmed that people still brought the notes to the church as offering.
Denominations worthless in Oyo
Traders and commercial drivers in Oyo State have described N5 and N10 as worthless. They said they might go into extinction soon.
Residents who spoke with our correspondent said they were no longer accepting the money for transaction due to loss of value.
On behalf of traders and commercial drivers at Agbeni Market, Alhaja Dunni Akinola and Kamil Oladejo, spoke on the denominations.
“I don’t accept them again; so also our people in the market. There is nothing you can buy with them. So, why accepting them? They will only make your purse huge but have no value, Akinola, a trader, said.
“Currencies made with polythene nylon are usually strong but dont last. Once they get torn, people won’t collect them from us again, not even as change. But we do accept if they are new and much,” he added.
Oladejo, a commercial driver, said: “I don’t know how we got to this level. Our currencies are becoming valueless on daily basis and government is not doing anything about it. In 2014, we used to collect N30 from our customers from one bus-stop to another. But these days, our services start with N50.”
Scarcity of N5, N10 big challenge in Niger
In Niger State, parents, teachers and small business owners said scarcity of the two denominations posed serious challenges to businesses and livelihood. While small business owners said they lacked the notes to give change to customers, parents lament that they had to give their school kids more than the desired amount because of the scarcity of the denominations.
Malam Umar who sells provisions in Minna said sometimes, customers were forced to pick items in exchange for the N5 or N10 change, while in other cases, they forfeit the change.
A parent, Malam Abdulkadir Shehu, said: “Now, you can’t get even common biscuit for N10 or N5. Prices of things begin with N20.”
Another parent, Malam Idris Bida, said his daughter who is currently in nursery school preferred N10 to any other denomination but its scarcity often makes her to cry. “If I give my daughter N20, she would say she prefers the orange colour denomination which is N10,” he said.
A teacher, Fatima Mohammed, told Daily Trust on Sunday that she often times forfeited change of N10 after a taking commercial tricycles because the drivers do not always have N10 change. “Most of the things we buy for our kids now are between N20 and N50,” she said.
The situation is similar in Kaduna where Umar Ramalan, a resident of Badarawa, said he had stopped using N5 and N10 currency denominations and could no longer remember the last time he spent them.
“Except they are given to me as change if I buy something in shops. But the truth is that I don’t like holding such notes and I don’t give them to my children to spend, “ he said.
Aliyu Suleiman, a resident of Rigasa, said she always tried hard to get the notes for his children to take to school. “I use N10 to buy sachet water to drink. So, I try to keep the change,” he said.
Muktar Aliyu, an undergraduate, said he always kept the money to give beggars.
“I spend N50 and above because with it, you can get a good sugarcane to chew or something tangible.”
In Plateau State, a resident of Kufang in Jos South Local Government Area, Isaac Abraham, said there was nothing N5 and N10 could buy, except it was combined with a higher denomination to make up for the required purchasing power.
Isaiah, a shop owner who spoke to our correspondent at the Old Airport Junction in Jos, said the only thing customers could buy with N10 from his shop was sachet (pure) water.
Abubakar Danjuma who sells food spices and seasoning at the Jos Taminus Market said even a cube of bouillon cube is now N10 and he hardly has change to give to buyers, except they buy in large quantities to be able to to give change. Danjuma recalled that just as coins like N1 had gone gone into extinction due to its zero-purchasing power, N5 and N10 too were on the verge of going into extinction.
In Kano and Katsina, N5 and N10 are still in circulation with residents testifying that they still enjoy their values.
Alhaji Muhammad Zahraddeen in Katsina said: “Yes, we still get some values from them. For example, as a father of little children, I still get some relief in giving them either N5 or N10 and they still appreciate them. If they are not in circulation, you have no other option than to give them higher denominations.”
“Similarly, in my house, my wife sells pure (sachet) water at the rate of N5 and if it becomes ice block, it is sold at N10. But if things continue the way they are now, definitely we will soon lose them as we lost our coins,” he added.
Another parent in Katsina, Malam Muhammad Jamilu, said there are some seasonal things such as garden eggs that are still sold at N5 and above which give the currency some value.
“Children can still buy things like tiger nuts, snacks like sesame seeds prepared with sugar or salt as well as some locally made confectionaries meant for primary school children. So, as far as children are concerned, the two currencies still have some value. But for adults, I think the only thing they can buy with N5 or N10 is pure water and that’s really bad,” he said.
Our correspondent’s visit to some primary schools revealed that there are still some locally made delicacies bought by the pupils at N5.
Malama Hauwa, an old woman who sells such things at the gate of one of the schools, said that she sold all her items at N5 per one.
“We are dealing with little children and every child wants to buy one or two things during break period. While some children are from well-to-do families, others are from poor families and they won’t be happy if they could not get what they can afford,” she said.
“All we have here are either locally prepared cakes and sweets or things like tiger nuts, groundnut and baobab fruits soaked with sugar, and everything is N5,” she said.
The situation is the same in Kano. But unlike in Katsina where a sachet of water can be bought at N5, it is sold at N10 in Kano. But in some cases, three sachets go for N20. Confectionaries, too, are sold at N10 per one in most cases.
A political analyst, Mr Charles Ahamefuella, said the lower denominations were going into extinction because Nigeria’s revenue is dependent on raw materials and resources, but not on industrial products.
“Countries with strong currencies are industrial countries that export industrial goods; not an oil-dependent country like Nigeria,” he said
Pastor John Chinoso, appealed to the Federal Government to open the borders as a way of tackling the high cost of goods in the market.
N5, N10 notes not rejected in Akwa Ibom
In Akwa Ibom, N5, N10 notes are not rejected in markets, banks, churches.
Residents said the notes are still largely used for business transactions, especially in the market and even as offering in churches.
Our correspondent gathered that the currencies were not rejected in the markets by traders and buyers mostly because they remain legal tenders in Nigeria. Also, some items such as sweets, chewing gums and even onions are still being sold for N5 and N10.
A food business owner in the University of Uyo, Ms Esther Benson said she had never rejected the notes in the market or at her shop.
She said it was only coins that were no more in circulation . She added that she recently gave out 10 pieces of N5 notes to someone and they were not rejected.
“No. N5 and N10 are not rejected. It is Nigerian currency. It is only coins that people no more collect. Moreover, they are not in circulation except probably in the bank. Even yesterday, I had up to ten N5 notes that I gave out as change and they were collected from me,” she said.
A bank marketer who spoke on the condition of anonymity said banks could not reject N5 and N10. “Why would they not accept them? In fact, banks cannot reject the money,” she said.
A security guard who also runs a petty shop for a church, Mr Jimmy Hanson, confirmed that people still use the denominations as offering in churches.
While corroborating the fact that the money had lost value, he said that biscuits that he used to sell for N10 in his shop were now sold for N15.
We are still collecting N5, N10 – traders
Some traders said despite the fact that there is no particular item that is sold at N5 in the market, it’s accepted as a legal tender for any business transactions.
A trader in Oyigbo in Rivers State, Mrs Joyce Nmgbochi, said she always accepted both denominations in her provision shop.
“N5 and N10 are still accepted as a means of exchange for business transactions. Though it’s difficult to get a particular item that is sold at N5, when somebody buys an item worth N50 and pays with N5 notes, we accept it because it’s still our legal tender. Although both N5 and N10 notes are gradually going to extinction because it’s difficult to get a particular item that is sold at N5, we still have other items such as sweets, chewing gums and many other small small things that are sold at N10. So, they are still very important and we still need them for our business,” she said.
Another respondent, Monica Okonkwo, said: “Pure (sachet) water goes for N20. The least biscuit is sold at N20. But when one buys biscuit worth N20 and gives N50, I need N30 to give the buyer as change. So, N5 and N10 are still very important and we accept them,” she said.
In Owerri, traders and commercial vehicle operators said they still accept N5 and N10 notes because they could be used as change during transactions.
“We still accept N5. If you buy N100 worth of food and you bring 20 pieces of N5, I will collect it. But it is very rare to see N5 and N10 nowadays,” Ifeyinwa, a trader at Owerri, noted.
Experts speak
A financial expert, Enefiok Okoh, said devaluation of the naira was responsible for the drop in value and looming extinction of the N5 and N10 denominations.
“We used to have coins but Nigerians don’t like carrying them because of their weight and inconveniences, especially because they no longer have value,” he said.
Another financial expert, Richard Orji, said it was disheartening that Nigeria’s currency was losing value on a daily basis. He lampooned politicians for failing to initiate policies that can strengthen the naira.
“It is sad that N5 is almost worthless, but if you have $5 you can get a decent meal in America and any part of the world. Instead of our leaders to learn from this, they will be frying akara and corn for people during elections as if they will solve our economic woes,” he said.
The Head of Department of Pre-ND and lecturer in the Economic Department at Isa Mustapha Agwai Polytechnic, Lafia, Mr Obadiya Yaro called on the federal government to introduce price policy because it would go a long way in diversifying various kinds of production and minimizing over dependence on importation. This, he said, would improve the value of the naira.
“Our economy is inelastic. So, import dependence must stop. We produce virtually nothing. We become the consumer of what we don’t produce. We produce what we don’t consume,” he said.
Clement Adeyi (Abuja), Usman A. Bello (Benin), Bassey Willie (Yenagoa), Eyo Charles (Calabar), Victor Edozie (Port Harcourt), Jude Aguguo Owuamanam, Linus Effiong (Umuahia), Iniabasi Umo, (Uyo) Tijjani Ibrahim (Katsina), Lubabatu I. Garba (Kano), Iniabasi Umo (Uyo), Jeremiah Oke (Ibadan), Abubakar Akote (Minna), Mohammed I. Yaba (Kaduna), Umar Muhammed (Lafia) & Dickson S. Adama (Jos)