An economic research firm has called on Nigeria's central bank to create new high-value currency notes to address the naira's declining purchasing power and make everyday transactions easier. The proposal for N10,000 and N20,000 denominations comes as the country's highest existing note, the N1,000, has lost most of its value compared to two decades ago.
Quartus Economics, an independent research group, made the formal recommendation in a recent economic review titled “Is Africa’s Eagle Stuck or Soaring Back to Life?” The report argues that higher denomination bills would help restore what it calls the naira’s “portability” and lower the growing costs of cash transactions throughout Nigeria's economy .
The think tank's findings highlight a currency in steep decline. When the N1,000 note was first introduced in 2005, it held a value of nearly seven U.S. dollars. Today, that same bill is worth less than sixty American cents. This dramatic drop in purchasing power means Nigerians now must carry significantly larger amounts of cash for basic transactions, especially in the country's extensive informal sector where electronic payments are not widely used .
Economic Rationale for New Notes
The push for higher-value currency stems from what economists call “portability” - how easily people can carry enough money for their daily needs. With the naira's sharp depreciation, particularly over the past two years, simple commercial activities have become increasingly difficult. Market traders, artisans, and rural consumers often need thick stacks of notes for routine purchases that once required just a few bills .
The cost of maintaining Nigeria's current currency system has become prohibitive for the Central Bank of Nigeria. Printing, securing, and transporting large volumes of low-value notes places a heavy financial burden on the institution. Quartus Economics estimates that the naira's real value has fallen by ninety-four percent over the last twenty years. To put this in perspective, a N5,000 note that was proposed back in 2012 would today need to be worth N50,000 to have equal purchasing power .
The report uses essential goods and services to demonstrate the currency's loss of value. A kilogram of imported rice that sold for about N150 in 2005 now costs approximately N2,500. Similarly, a one-way flight from Lagos to Abuja has jumped from N12,000 to more than N150,000 during the same period. These examples show how much more currency Nigerians now need to conduct basic business and travel .
Addressing Inflation Concerns
A common criticism of introducing higher-value notes is the fear it could make inflation worse. Quartus Economics describes this widespread belief as a myth that lacks supporting evidence. The report states that inflation comes from either cost-push factors, like production expenses, or demand-pull factors, when too much money chases too few goods. Neither type relates directly to what denominations of currency circulate in the economy .
“Inflation is cost-push or demand-pull. Neither is related to currency denomination,” the report states. “Countries introduce higher-value notes to maintain portability after a period of significant currency depreciation, not to trigger inflation” . The research emphasizes that creating higher denomination notes represents a practical response to currency weakness rather than a cause of price increases.
The proposal involves replacing existing currency value with more convenient forms, not expanding the money supply. This distinction is crucial for understanding the economic argument. The central bank would not be printing more money in economic terms, but rather updating the currency's physical form to reflect current price levels .
Previous Attempts and Current Economic Context
This is not the first time Nigeria has considered higher-value currency notes. The Central Bank of Nigeria previously proposed a N5,000 note in 2012 under the leadership of then-Governor Sanusi Lamido Sanusi. That initiative faced strong public opposition and was eventually abandoned. Quartus Economics argues that the economic logic behind that rejected plan has only grown stronger in the years since, given the naira's continued decline .
The currency proposal arrives amid a challenging economic period for Nigeria. The International Monetary Fund acknowledges the country's difficult reforms over the past two years, including foreign exchange market liberalization and fuel subsidy removal. These policies, while intended to address long-term economic problems, have contributed to current hardships including inflation that exceeds twenty percent .
The naira has been on what economists call a roller-coaster ride throughout 2024. Despite recent strengthening to about N1,457 per U.S. dollar, the currency remains weak compared to historical levels. Nigeria's status as an import-dependent economy means this weakness directly translates to higher prices for imported goods .
Economic analysts project continued pressure on the naira through 2025, particularly during the final quarter when political campaigning for the 2027 elections is expected to begin. Contestants typically build campaign funds mostly in foreign currencies, increasing demand for dollars and other stable currencies .
Broader Economic Challenges
Beyond currency portability, Nigeria faces multiple economic hurdles. The poverty rate stood at forty-two percent in 2023, with about sixty-three percent of Nigerians considered multidimensionally poor when accounting for access to health, education, and living standards. Food inflation has been particularly severe, running at about forty percent due to supply constraints including insecurity, severe weather, and low agricultural productivity .
The International Monetary Fund recommends Nigeria focus on three key priorities: establishing stronger and more inclusive growth, creating an effective budget framework, and increasing domestic revenues. The IMF notes that Nigeria needs a growth rate of at least six percent for three straight years to significantly improve living standards. Current projections show the economy expanding at about three percent in 2025, below the average for sub-Saharan African countries .
While the government's reforms have received international praise, their positive effects have yet to reach many Nigerians. The country continues to grapple with poor infrastructure, especially in electricity generation, which limits economic activity. Additionally, the social safety net remains underdeveloped, leaving the most vulnerable without protection from economic shocks .
Public Reaction and Alternative Views
Initial responses to the currency proposal on social media platforms have been mixed. Some commenters question the need for higher notes when electronic payment options exist. Others express concern about how the changes might affect everyday transactions, with one social media user joking about problems getting correct change from bus conductors .
Several experts suggest different approaches to the currency challenge. Some have called for the reintroduction of coins for lower denominations and limits on N1,000 notes instead of creating higher values. Another view circulating on social media suggests that the real motivation for higher denominations is to make large-scale cash corruption easier by reducing the physical space needed to store and move money .
The research firm acknowledges these concerns but maintains that the practical benefits outweigh potential drawbacks. They emphasize that outside of formal sector businesses and urban elites, the naira's heavy physical weight has become a drag on economic growth and transaction speed. Making the currency more portable would particularly benefit those who rely on cash for their daily lives .
As Nigeria continues its economic reforms, the proposal for higher-value currency notes represents one potential solution to practical problems faced by millions of citizens. The Central Bank of Nigeria has not yet indicated whether it will seriously consider the recommendation. Previous public opposition to similar plans suggests that any move toward higher denominations would require extensive public explanation and education about the economic rationale .