Kobo and naira coins in Nigeria must feel like the introvert that withdraws to a corner of the party to watch everyone else have fun. In fact, talking about coins as legal tender in Nigeria feels like time-travelling back to 2007 when Obasanjo was still president and sardine wasn’t a luxury item. So, why are kobo and naira coins back in the news?
In 2007, the governor of the Central Bank of Nigeria (CBN) at the time, Charles Soludo, rebranded and reissued ₦1 and 50 kobo coins and introduced ₦2 coins.
The Bank expended a huge budget in sensitisation and advocacy for Nigerians to use them, but commercial banks and citizens were not feeling them.
Kobo and naira coins have grown over time to have low purchasing power in the markets, which means trying to sell them to Nigerians is like mining snow in the desert.
In 2012, another CBN governor, Lamido Sanusi, announced a proposed currency restructuring exercise that was codenamed “Project CURE (Currency Restructuring)”. The project was the Bank’s attempt to respond to the changing needs of the economy and to stay on top of evolving trends.
When he announced the project, Sanusi admitted that Nigerians didn’t seem to care for coins. What was his cure for that problem? More coins!
Sanusi said the CBN would coin ₦5, ₦10 and ₦20 and put them in circulation in 2013. The proposed currency lineup looked like this:
President Goodluck Jonathan killed Project CURE in September 2012, else you’d be buying gala right now with coins. Jonathan asked the CBN to pause the project, and nothing was ever heard of it ever again.
The House of Representatives passed a motion on Tuesday, March 22nd 2022 urging the CBN to reinforce the use of kobo and naira coins as legal tender in Nigeria. Honourable Muda Lawal Umar sponsored the motion and pleaded that the coins shouldn’t be allowed to go extinct.
His motion argued, “Injecting low denominations into the economy will go a long way in curbing price inflation and stabilising the economy.”
And by that argument, we imagine he means something like this:
Who needs kobo and naira coins?
Some economists consider the absence of kobo and naira coins in circulation one of the reasons for Nigeria’s struggles with inflation. For example, if a low-priced item increases its price today, it’d have to go from, say, ₦5 to ₦10. But if coins are available, they could slow down that inflation rate, as the item would likely first increase to ₦6 or ₦7 instead of just jumping to ₦10.
But Nigerians’ history with coins has shown they’re unlikely to hook up with them again. Who wants to risk being stoned with coins by an angry bus conductor? Or go around like a walking alarm bell? Also, you can’t do this with coins:
What will happen with this new motion?
The House Committee on Banking and Currency has been charged with ensuring the CBN complies with the motion on reinforcing the use of kobo and naira coins. This entails communication to the Bank that’s currently under the leadership of Godwin Emefiele.
Since he was appointed CBN governor in 2014, Emefiele’s not messed with the natural order of things for coins.
The only coin he’s interested in is Bitcoin and how to ban it. It’s unlikely this new motion will lead to anything meaningful.