In a bold call to modernize Nigeria's currency amid relentless naira depreciation, leading economic think tank Quartus Economics has urged the Central Bank of Nigeria (CBN) to introduce higher-denomination banknotes of N10,000 and N20,000.
The recommendation, detailed in the firm's latest report titled Is Africa’s Eagle Stuck or Soaring Back to Life?, aims to restore the naira's practicality for everyday transactions, where the current highest note of N1,000 has become increasingly cumbersome for users.
The report paints a stark picture of the naira's erosion over the past two decades, highlighting a staggering 94% decline in its real value.
Using everyday benchmarks, Quartus illustrates this loss: in 2005, when the N1,000 note was first introduced, equivalent to nearly $7 at the official exchange rate a kilogram of imported rice cost about N150, and a one-way flight from Lagos to Abuja averaged N12,000.
Today, that same rice sells for N2,500 per kilogram, while flight tickets have ballooned to over N150,000.
The N1,000 note now fetches less than 60 US cents, rendering it "practically obsolete" for meaningful purchases."This depreciation has made everyday transactions burdensome, particularly in the informal sector, where cash remains dominant," the report states.
Traders, artisans, and rural consumers often find themselves lugging around bulky wads of low-value notes, slowing economic activity and increasing vulnerability to theft.
For the CBN, the strain is equally acute: the costs of printing, transporting, and securing these smaller denominations have become "prohibitive," draining resources that could be better allocated elsewhere.
Quartus Economics emphasizes that higher notes are not a recipe for inflation, debunking a common misconception.
"Inflation is cost-push or demand-pull. Neither is related to currency denomination," the report asserts.
"Countries introduce higher-value notes to maintain portability after a period of significant currency depreciation, not to trigger inflation."
Instead, the proposal is framed as a practical modernization step, akin to those taken by other emerging economies facing similar currency pressures.
Alternatives floated include a full redenomination of the naira, but the immediate focus is on N10,000 and N20,000 bills to "make the naira portable again."
The timing of this urging is poignant, coming just over a decade after a similar CBN proposal for a N5,000 note in 2012 under then-Governor Sanusi Lamido Sanusi.
That initiative was shelved amid widespread public backlash, fueled by fears of economic manipulation. Quartus counters such concerns head-on: "These indicators show how much the naira has lost its purchasing power, and a higher-value note is needed to make the naira portable.
Outside the formal sector and the urban elite, the naira's heavy weight is a drag on the economy and slows down growth."As of now, the CBN has not publicly responded to the report.
However, with Nigeria's inflation hovering above 30% and the parallel market exchange rate exceeding N1,600 to the dollar, pressure is mounting for bold reforms.
Economists like Dr. Aisha Bello of the Lagos School of Economics echoed Quartus's sentiments in a recent interview, noting, "In a cash-heavy economy like ours, ignoring denomination updates is like pretending the naira hasn't lost its wings—it's time to let it soar again."
If adopted, the new notes could streamline commerce, cut logistical expenses, and signal to investors that Nigeria is adapting to its fiscal realities.
For millions of Nigerians still reliant on physical cash, it might mean lighter wallets and faster deals at the market. As the eagle on the naira flutters uncertainly, Quartus's plea underscores a simple truth: in an economy under siege, even the currency needs an upgrade to keep pace.
The full Quartus report is available for download on their website, and CBN officials have been approached for comment.
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