The Story Of How Naira Replaced The Pound As Nigerian Currency

January 2022, makes it 49 years since the Naira became Nigeria’s official currency. Although it has been on a steady fall against the US dollar and other foreign currencies in recent times, it had a bright beginning, exchanging for N1 to 99 cents and 68 Pence in the 1970s to early 80s.

The entity known as Nigeria has been in existence for 106 years and on October 1, 2020 the country celebrated the 60th anniversary of its independence from colonial rule.

But what was the means of exchange in Nigeria during the period before amalgamation, independence and post-independence, before the 49-year-old currency came into existence?

As it was in other parts of the world where the earliest people devised a means to trade using a variety of items like cowries, beads, and salt, different communities in Nigeria also had their unique legal tender before the arrival of the British colonialists. It, however, changed in 1880 when Shillings and Pence were introduced by the British colonialists as the first major currency in Nigeria following the colonial ordinance of that year.

The British introduced Shillings and Pence (one shilling, one penny, 1/2 penny and 1/10 penny) as the legal tender in their West Africa colonies (Nigeria, Ghana, Sierra Leone and Gambia). Although the currency was managed by the Bank of England, it was distributed by a private bank, the Bank for British West Africa until 1912 when the West African Currency Board (WACB) issued the first set of banknotes and coins in Nigeria, Ghana, Sierra Leone and the Gambia – all British colonies. The highest banknote denomination was one pound, while the one shilling coin was the highest coin denomination.

As the call for independence of the four West African countries under the authority of the British was gathering momentum, the need for the countries to run their affairs themselves became imperative. Ghana was the first to become independent in March 1957, Nigeria followed in 1960, Sierra Leone in 1961 and the Gambia in 1965.

The Pound which was Nigeria’s official currency ceased to be when the Naira and Kobo came into existence. Photo: AfricanBankNotes.

As Nigeria was preparing for self government, the Central Bank of Nigeria (CBN) was established in 1958. On July 1, 1959 when the CBN commenced operations, it started issuing Nigerian currency banknotes (Pound) while the notes and coins issued by WACB were withdrawn.

About 13 years after independence, the Naira and Kobo (in coins) came into existence and the Pound and Shillings ceased to be Nigeria’s official currency.

As the economy was growing, the use of coins for transactions had become unbearable, so the government of General Olusegun Obasanjo introduced the N20 note on February 11, 1977.

According to the Central Bank of Nigeria, “It was the highest denomination introduced at the time as a result of the growth of the economy; the preference for cash transactions and the need for convenience.”

In the 1970s, One Naira was competing strongly with the US Dollar and British Pound. But from the late 1970s to 2022, the value and purchasing power of the Naira have been on a consistent fall.

According to the New African Magazine, in March 1985, with N25 nursing mothers could buy a tin of baby food which now costs around N3000 to N4000. The Africa Special Report: Bulletin of the Institute of African American Relations, published in 1992, also revealed that the fall in world oil prices after the boom of the 1970s led to increase in the price of commodity, and in 1992, the price of a 50-kilogram bag of rice rose from N450 to N650, the same bag now sells for N35,000 or more in Lagos markets.

Before the introduction of the N20 notes, the country was trading in coins, which means a cash transaction worth N20,000, could require a big ‘Ghana Must Go’ bag. On 11th February 1977, a new banknote with the value of twenty naira (₦20) was issued and from that year, bank notes became a thing.

Bearing the portrait of former Head of State, General Murtala Muhammed who was assassinated in February 1976, the N20 note also became the first to bear the portrait of a Nigerian. Since then, all Naira notes denominated in values from N5 to N1000 have carried images of past political leaders and heroes.

Plans by the Nigerian government to introduce a N5,000 note attracted wide criticism in 2012.

Ladi Kwali the potter at the flipside of the N20 note became prominent for her pottery work. Chief Obafemi Awolowo, the first Premier of the Western Region is on the N100 note, Sir Abubakar Tafawa Balewa, Nigeria’s first prime minister, is on the N5 note, and Nnamdi Azikiwe, Nigeria’s first president, is on N500. Two former Governors of the CBN – Clement Isong and Alhaji Aliyu Mai-Bornu also appear on N1000.

In 2012, plans by the government to introduce a N5,000 note attracted wide criticism as pundits argued that the introduction will increase inflation and encourage corruption and money laundering. Efforts by successive governments to boost the value of the Naira through different economic policies have also failed to yield results.

According to the CBN, as at July 31, 2020, there are N2,394,632,000,000 – in circulation.