Calls are growing for the Central Bank of Nigeria (CBN) to introduce higher-value currency denominations — specifically N10,000 and N20,000 notes — to address the declining purchasing power of the naira and the rising cost of cash transactions.
A new macroeconomic review by Quartus Economics, titled “Is Africa’s Eagle Stuck or Soaring Back to Life?”, made the recommendation, arguing that the value erosion of Nigeria’s highest denomination, the N1,000 note, has rendered it practically obsolete for large transactions.
Rising pressure on naira value and currency usage
The report stated that the N1,000 note, which was introduced in 2005 and valued at nearly $7 at the time, is now worth less than $0.60 at the official exchange rate.
This, according to the analysts, has made everyday transactions cumbersome and unproductive, especially in Nigeria’s largely cash-driven informal economy.
To restore the naira’s portability, the report recommended that the CBN introduce N10,000 and N20,000 notes or consider a full currency redenomination.
Such measures, it noted, would modernize the naira’s structure, improve efficiency, and reduce the high cost of cash logistics currently borne by both banks and the apex bank.
Why the call for higher-value notes matters
According to Quartus Economics, the naira’s purchasing power has fallen by as much as 94 per cent over the past two decades.
The report explained that if the CBN had gone ahead with its 2012 proposal to introduce a N5,000 note, its value today would be equivalent to a N50,000 note due to inflation and currency depreciation.
“Introducing higher-value currency denominations does not cause inflation. Inflation is cost-push or demand-pull in nature — not denomination-driven,” the report clarified.
“Countries introduce higher-value notes to maintain currency efficiency after long periods of depreciation, not to trigger inflationary pressure.”
The economists argued that higher-value notes would restore convenience to financial transactions, particularly for small business owners, traders, and rural dwellers who rely heavily on cash.
Many Nigerians now carry large sums for basic purchases that could easily be handled with fewer, higher-value notes.
Cash handling costs and inflation control
Beyond restoring ease of transaction, introducing N10,000 and N20,000 notes could also reduce the CBN’s growing expenditure on printing and transporting lower-value notes.
“Outside the formal economy, the naira has become physically heavy and financially inefficient,” the report noted.
“The cost of maintaining lower-value notes is rising, while their utility is falling. Nigeria needs a higher denomination to realign its monetary system with current realities.”
Analysts further stressed that redenomination or introduction of higher notes should not be mistaken for currency expansion, as it does not necessarily mean printing more money.
Instead, it is a structural adjustment to reflect the real value of money in circulation.
Countries such as Ghana, South Africa, and Kenya have, at different times, redenominated or adjusted their currency denominations to address depreciation.
For example, Ghana’s 2007 redenomination exercise simplified its cedi structure, improved confidence, and enhanced the currency’s usability.
Quartus Economics suggested that Nigeria could adopt a similar approach, introducing new notes while maintaining prudent monetary controls to prevent excess liquidity.
The CBN’s earlier attempt to introduce a N5,000 note in 2012 under then-Governor Sanusi Lamido Sanusi was met with public criticism and ultimately shelved. Many Nigerians feared it could trigger inflation or worsen corruption.
However, Quartus Economics maintained that those fears were misplaced.
“The economic justification that existed over a decade ago is even more urgent today,” the firm said.
“The naira has continued to lose value, while transaction costs and printing expenses have multiplied.”
The firm’s findings highlighted real-world examples to illustrate the naira’s erosion. In 2005, a kilogram of imported rice cost about N150; today, the same quantity sells for around N2,500.
Similarly, a one-way domestic flight ticket that cost N12,000 two decades ago now exceeds N150,000.
“These indicators show how deeply the naira’s purchasing power has fallen.
A higher-value note would not solve inflation overnight but would make cash transactions more efficient and reduce pressure on physical currency circulation,” the report added.
Experts have also urged the CBN to ensure that any move to introduce N10,000 and N20,000 notes aligns with its digital financial inclusion goals.
While mobile banking and e-payments continue to grow, cash remains dominant in many parts of Nigeria, particularly in rural and informal markets.
The introduction of higher denominations, coupled with efforts to strengthen digital transaction systems, could create a more balanced and efficient financial ecosystem.
For many economists, the proposed measure represents a pragmatic response to Nigeria’s persistent inflation and naira weakness rather than a policy gamble.
As one analyst noted, “When a currency’s highest note can no longer buy a decent meal or pay for basic transport, it signals a need for structural change.”
As the CBN continues to implement its monetary reforms and inflation-control strategies, the debate over introducing N10,000 and N20,000 notes may soon move from recommendation to reality.
Whether the apex bank acts on it or not, the conversation underscores a crucial truth — that Nigeria’s monetary system must evolve to reflect the economic realities of today.
