- What is Nigerian currency? The Naira is the Nigerian currency. It was introduced on 1 January 1973, replacing the pound at a rate of 2 naira = 1 pound.
If you have read our previous post on the different currencies in Nigeria, used from past to present. Then you should already know what the Nigerian currency is.
The difference between this post and the previous, is the obvious focus on the Naira as the main subject for discussion on this article. Unlike the previous post that was more about the several currencies used in the country overtime.
To continue with this article I would love to borrow some paragraphs from the above linked post.
What Is Nigerian Currency?
The Nigerian currency is the Naira. The subdivision of the Naira, kobo , is named by a derivation of the English ” copper .” And it was introduced on 1 January 1973, replacing the pound at a rate of 2 naira = 1 pound.
Making the country, the last former British colony to abandon the
£sd currency system in favour of the decimal currency system.
In 1973, coins were introduced in denominations of ½, 1, 5, 10 and 25 kobo, with the ½ and 1 kobo in bronze and the higher denominations in cupro-nickel.
On January 1, 1973, the Central Bank of Nigeria introduced notes for 50 kobo, 1, 5, 10 and 20 naira.
On 11th February 1977, a new banknote with the value of twenty naira (₦20) was issued. It was the highest denomination introduced at the time as a result of the growth of the economy.
he banknote was the first in Nigeria to bear the portrait of a prominent Nigerian citizen, the late Head of State, General Murtala Ramat Muhammed (1938-1976) who was the torch bearer of the Nigerian Revolution in July, 1975.
In 1991, 50 naira notes were issued, followed by 100 naira in 1999, 200 naira in 2000, 500 naira in 2001 and 1000 naira on October 12, 2005.
The main feature on the 1000 Naira note, is the engraved portraits of Alhaji Aliyu Mai-Bornu and Dr Clement Isong , former governors of the Central Bank of Nigeria in front.
The naira for the first time in 2019, featured the signature of a woman. Priscilla Ekwere Eleje , the Director of Currency operations of the Central Bank of Nigeria at the time. 2
The Nigerian currency is what you would refer as a rolling stone. For many Nigerians, what the Nigerian currency is, is an economic heart break.
In the 70s to early 80s, that is before the introduction of President Ibrahim Babaginda’s Second-Tier Foreign Exchange Market (SFEM), the naira exchanged for something like 90 kobo to $1.
The SFEM was introduced in September 1986 as part of a package of IMF reforms that general Ibrahim Babangida (IBB) was forced to accept. By the time IBB left office in 1993, the naira was exchanging for 17 naira to $1. Ushering with it the bureaux de change into the economy.
During the whole of Abacha tenure which for about five years, the Naira was pegged against the dollar at 22naira = 1 dollar.
The naira was trading as high as 88 naira to $1 while the official rate remained 22 naira for those years. A period that saw many Nigerians make great fortunes in the banking sector.
The foreign exchange value of the Nigerian naira has fallen on multiple levels over the years and now trades for almost 400 naira to 1 dollar.
The only period since then, when the naira gained about 20% against the dollar without anyone explicitly trying to ‘strengthen’ was in late 2003, when oil prices began to rise steadily from around $30 per barrel till they peaked at $140 per barrel in the middle of 2008. This period of rising oil prices was also the period that Nigeria obtained its $18 billion debt relief from the Paris Club.
First of all, rising oil prices allowed Nigeria’s foreign reserves to increase substantially. There were reserves and there was also the Excess Crude Account (ECA) which had more than $20 billion at one point in 2008.
The bankers at the time spoke of not even needing to go to CBN for dollars for weeks.
Then oil prices started to fall from late 2008, till it got to 50 dollar a barrel but by then, Nigerian foreign reserve was already comfortably sitting at $62 billion.
Today, that reserve is somewhere below $20 billion and with the level of borrowing carried out on the international level by President Buhari’s administration, many fear that economic situation in Nigeria will get worse before it gets better. 3
The foreign currency earned by Nigeria is spent on supplies abroad for basic items such as food, wears, electronics, and refined petrol. According to Nigeria’s foreign trade report, in 2019 alone Nigeria spent about N16.959 trillion ($47 billion) on imports compared to N13.1 trillion ($36.5 billion) a year earlier. 4