When was the last time a N1,000 note felt valuable? Think about the physical reality of money in Nigeria today. To buy a tank of fuel or a week’s groceries, you need a stack of N1,000 notes. A new economic review by Quartus Economics, first highlighted in a report by ThisDayLive, just said what many have been thinking: our cash is broken.
The report, “Is Africa’s Eagle Stuck or Soaring Back to Life?”, argues that Nigeria’s highest bank note is so worthless it’s actually dragging the economy down. Their solution is bold, and to many, terrifying: The CBN needs to introduce N10,000 and N20,000 notes.
Before you jump to conclusions (Zimbabwe, hyperinflation!), the most important part of this story is why this isn’t the crazy idea it sounds like.
The “Portability” Problem
First, let’s look at the diagnosis. The report says the naira has lost its portability.
- What is Portability? It’s one of the basic functions of money. It just means it should be easy to carry. Money is supposed to be more convenient than trading live goats. But when you need a “Ghana-Must-Go” bag to pay for a new generator, it has failed this basic test.
The numbers are staggering.
- When the N1,000 note was introduced in 2005, it was worth nearly $7.
- Today, it’s worth less than 60 US cents.
The report uses two real-world examples: a bag of rice and a flight ticket. Since 2005, the price of imported rice has increased by over 1,500%. A Lagos-Abuja flight is up over 1,100%. The naira’s purchasing power has collapsed by 94%.
This isn’t just an inconvenience; it’s a direct tax on the informal economy. The “urban elite” (as the report calls them) can escape this with banking apps. But the market trader, the artisan, the rural farmer, they live on cash. They are the ones who have to carry, secure, and transport these bulky, low-value notes to do business.
The Great Inflation Myth
Now, let’s tackle the main argument against this: “Won’t printing N20,000 notes cause massive inflation?” The Quartus report calls this a “myth unsupported by evidence.” This is the most critical part to understand.
Inflation is not caused by the number printed on a piece of paper. Larger economic forces cause it. The report breaks them down:
- Demand-Pull Inflation: This is “too much money chasing too few goods.” When the government prints more money (i.e., increases the total money supply) and injects it into the economy, you get this.
- Cost-Push Inflation: This is when the cost of making things goes up. Think: the price of diesel for generators, the cost of imported raw materials (thanks to a weak naira). Businesses are forced to “push” these costs onto you, the consumer.
Notice that neither of these has anything to do with the denomination. Introducing a N10,000 note is not “printing more money.” It is “printing smarter money.” It is simply swapping ten N1,000 notes for one N10,000 note. The total value in your hand is exactly the same. The report argues this isn’t a cause of inflation; it is a response to inflation that has already happened.
The Déjà Vu of 2012
This isn’t the first time we’ve had this conversation. In 2012, the then-CBN Governor, Sanusi Lamido Sanusi, proposed introducing a N5,000 note. The public and political backlash was so intense, based on the exact same inflation fears, that the plan was immediately dropped.
Now, 13 years later, that decision looks tragically short-sighted. The Quartus report calculates that because of the value destruction since 2012, the N5,000 note Sanusi proposed would need to be a N50,000 note today to have the same purchasing power.
We fought a practical, logical policy and lost a decade of convenience for it.
The Hidden Cost of “Cheap” Money
Here’s the final argument. This isn’t just a problem for us; it’s a massive problem for the Central Bank itself.
It costs a lot of money to print, secure, and transport cash. The CBN is spending a fortune to print, distribute, and manage almost worthless notes.
The report says the cost has become “prohibitive.” The CBN is essentially burning money to make money that can’t buy anything. By introducing higher-value notes, the CBN would drastically cut its own operational costs. They could print one N20,000 note for a fraction of the cost of printing twenty N1,000 notes.
The report concludes that the naira’s denominations are simply out of touch with reality. We have two choices: either print larger bills or do a full redenomination (like Ghana did, lopping zeros off the currency). One way or another, the “brick” of cash in your hand is a sign of a system that is long overdue for a practical fix.
