"Use Coins as Legal Tender" Reps tell CBN

The House of Representatives has persuaded the Central Bank of Nigeria to enhance the use of coins as legal tender and confirm that banks cling to the usage of coins to the maximum expanse conceivable. The Reps notified the CBN that the usage of coins could “stabilize” inflation.

This emerges the plenary endorsement of a gesture suggested by Honourable Muda Umar of Bauchi. Umar emphasized that despite the fact the Federal Government’s enormous budgetary involvement in the creation of coins as legal currency, the coins emerge to be extinct as he asserted.

The inflation rate in Nigeria reversed the trend in February as it rose 15.7% from 15.6% tallied in the forenamed month. This indicates a 0.1% degree gain differed from the tax documented in January 2022.

What the Rep is asserting

Concerned about unnatural inflation provoked by the non-usage of coins. Muda Umar ascertained, “business deals of common Nigerians have been relatively affected as the inadequacy of coins and other downward kinds have ensued in rates being summed up to the nearest Naira equivalent, a situation that can best be described as inflation in financial phrases.

“Worried that while other countries generate use of coins for their daily financial deals, the Nigerian coins comprising 50kobo, N1 and N2 have not been fully utilized in that regard.”

He asserted that the upswing in the use of coins could assist steady inflation. “Injecting low kinds and coins into the economy will go a high way in restricting rate inflation and stabilizing the economy,” he said.

The House, while accepting the gesture, instructed the Committee on Banking and Currency to secure compliance.

What you need to know

The Central Bank of Nigeria had cited the usage 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 elucidate the population on the essential safety characteristics, 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 asserted that the amount of counterfeit money in circulation decreased from 84,934 slabs in 2019 to 67,265 slabs of fake notes in 2020, depicting a 20.80% decrease. The insignificant cost of the 84,934 pieces is N64.71 million, while the insignificant value of the 67,265 pieces is N56.83 million, depicting a 12.18% decline in value.