Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has attributed the persistent scarcity of lower denomination naira notes to declining public demand, maintaining that the apex bank has neither withdrawn the notes nor stripped them of their legal tender status.
Speaking at the Bankers’ Committee retreat in Abuja, Cardoso said the CBN had not mopped up N5, N10, N20 and N50 notes or coins from circulation, arguing that changing payment habits have reduced demand for smaller denominations.
“The CBN has not withdrawn lower denomination notes and coins from circulation. The perceived scarcity is largely due to declining demand as Nigerians increasingly rely on electronic payment channels and larger denomination notes,” he said.
The governor’s comments come as consumers, transport operators, market traders and small retailers across Nigeria continue to report difficulty obtaining lower-value notes needed to provide change for everyday transactions.
While Cardoso’s clarification confirms that the lower denominations remain legal tender, economists argue that the issue extends beyond consumer preferences. They note that although inflation has significantly reduced the purchasing power of small-value notes, transactional demand remains strong in Nigeria’s largely cash-dependent informal economy.
Analysts say the more immediate challenge is the limited availability of the notes rather than a lack of demand. Many commercial banks rarely dispense lower denominations through their branches or automated teller machines (ATMs), forcing businesses and individuals to rely on informal cash exchanges to obtain change.
Industry experts also point to the economics of currency production. Printing and distributing low-value notes has become increasingly expensive as inflation pushes up production, transportation and security costs. Although the CBN has not publicly disclosed current production costs or confirmed that output has been reduced, economists say central banks globally face growing cost pressures when producing low-denomination currency.
Commercial banks likewise face financial disincentives in handling smaller notes. Transporting, storing and insuring bulky volumes of low-value cash carries operational costs that many lenders seek to minimise, contributing to weaker circulation across the banking system.
The shortage has broader implications for Nigeria’s cash economy. Although electronic payments continue to grow rapidly, millions of Nigerians, particularly those in rural communities and the informal sector, still depend heavily on physical cash for daily transactions.
Without improved distribution of lower denominations or policy measures that encourage banks to circulate them more widely, the shortage is likely to persist, increasing transaction costs for households and small businesses. Market observers say any lasting solution will require closer coordination between the CBN and commercial banks to ensure adequate cash circulation while balancing the rising cost of currency production.
