Everything has history including money in the context of its own. This means money which is American, Russian, Chinese, or Nigerian did not start to be so from heaven, there is a creation history for each.
The foregoing truth is why we shall be trailing the beginning of the use of money in the Nigerian context.
How Can We Define Money?
Money is defined as a current medium of exchange in the form of coins and banknotes. It is used in different ways, for example, trade, commerce, agriculture, education etc.
It is given in exchange for something else. It is a seal for something being received or collected.
In Nigeria, money is very important in our day to lives and activities, it is helpful both internally and internationally.
The central bank of Nigeria (CBN) is the sole issuer of legal tender money throughout the Federal Republic of Nigeria.
The money sign in Nigeria is N, while the code is NGN.
Introduction
Before the colonisation of the area referred to as Nigeria, the traditional mediums of exchange in Nigeria were cowries, beads, bottles, farm produce, and so on.
Up until 1958, Nigeria used the British West African pound along with Ghana, Sierra Leone and the Gambia. After the establishment of the Central Bank of Nigeria (CBN) in 1958, the CBN started issuing Nigeria’s own currency.
First, the Nigerian pound, shillings, and penny were popular from 1958 to 1972 until the Nigerian Naira and Kobo took over from 1973 onwards.
The pound was divided into 20 shillings, each shilling made of 12 pence. The Nigerian pound (which was at parity with the British pound sterling with free convertibility of course) was replaced with the Nigerian Naira on 1st January 1973 at a rate of £1 = ₦2.
This made Nigeria the last country to abandon the foreign currency system while also introducing a currency that started life with devaluation.
On 1st January 1973, the Nigerian Naira was introduced. The new currency replaced the Nigerian pound with an exchange rate of 2 Naira to 1 pound in the United Kingdom and 1 Naira to 60 cents in the United States of America. Even though that is not the case with foreign exchange presently in Nigeria.
As Nigeria’s Federal Commissioner of Finance, Chief Obafemi Awolowo coined the name Naira by collapsing the word Nigeria. In contrast, Kobo arose from the word copper because Nigeria’s coins were then made of copper.
Awolowo’s portrait adorns the 100 Naira notes. This article serves as a brief history of Nigeria through its money.
First Currency
The first significant currency issued in Nigeria was undertaken sequel to the colonial ordinance of 1880, which introduced the Shillings and Pence as the legal tender currency in British West Africa.
The units of coins managed by the Bank of England were one shilling, one penny, 1/2 penny and 1/10 penny. They were distributed by a private bank, the Bank for British West Africa, till 1912.
Independence Wave Across Africa
In 1958, local national currencies began to replace the British West African pound in the individual territories.
On 1st July 1959, the Central Bank of Nigeria (CBN) issued Nigerian currency banknotes, while the WACB-issued banknotes and coins were withdrawn. It was not until 1st July 1962 that the currency was changed to reflect the country’s republican status.
The banknotes which bore the inscription, ‘FEDERATION OF NIGERIA,’ now had, ‘FEDERAL REPUBLIC OF NIGERIA,’ inscribed at the top. The notes were again changed in 1968 following the misuse of currency banknotes during the Nigerian civil war.
Republic of Biafra
The republic of Biafra was a state in West Africa that existed from May 1967 to January 1970. It was made up of the states in the eastern region of Nigeria. The population of Biafra was estimated in 1967 to be 13.5 million.
The capital city of Biafra was Enugu in 1967, Umuahia from 1967 to 1969, Owerri from 1969 to 1970 and Awka in 1970. The Biafran pound was the currency of the breakaway republic of Biafra between 1968 and 1970.
The country coins were in 3 pence, 6 pence, 1 shilling, 2 ½ Shilling, 1 Crown and 1 pound. It also had notes in 1 pound, 5 shillings, 10 shillings, 5 pounds and 10 pounds.
Post War Nigeria
The government decided to change to a decimal system (decimalisation), of which Nigeria was the last former British colony to do so. The name of the Nigerian currency was changed on 1st January 1973. The major units of currency which used to be one pound, ceased to exist.
1 Naira, equal to 10 shillings, or half a pound, became the major currency unit. While the Kobo became the minor units with a hundred Kobo making one Naira.
As stated earlier, the name Naira was coined from the name Nigeria by the then Federal Commissioner of Finance, Chief Obafemi Awolowo. In contrast, Kobo was born from the English word copper because Nigerian coins were made of copper.
At the introduction of the Naira, the coins were ½ Kobo, one Kobo, five Kobo, ten Kobo and 20 Kobo, while the notes were 50 Kobo, 1 naira, 5 naira and ten Naira.
On 11th February 1977, the new 20 naira banknote was issued. This was the highest denomination then. It was introduced according to the CBN due to the economic growth and the need for cash transactions.
The 20 Naira was also the first banknote to have the portraits of a prominent Nigerian citizen on it – the murdered head of state, General Murtala Ramat Muhammad who led the 1966 Nigerian counter-coup in overthrowing the Johnson Aguiyi- Ironsi military regime.
The 20 Naira notes were issued on the first anniversary of his assassination as a tribute to him and he was declared a national hero on 1st October, 1978. Interestingly, the 20 Naira notes remain the only Naira notes to have the portraits of a military man. The rest of the Naira notes bear the portrait of civilians.
Thereafter, new currency banknotes of three denominations, one Naira, five Naira, and ten Naira were introduced on 2nd July 1979. They were of the same size as the 20 Naira notes. To differentiate the denominations, different colours were used to identify them.
These new notes also bore the portraits of prominent men. The one Naira notes featured the prominent politician Herbert Macaulay. The five Naira notes had Nigeria’s first and only prime minister, Sir Abubakar Tafawa Balewa portraits on them, and the ten naira notes have the portraits of Nigerian statesman, Alvan Ikoku.
They were all declared national heroes on 1st October 1978. For easy identification, different colors were used for the various denominations. Also, distinct cultural aspects of the country were engraved at the back of the notes.
However, in April 1984, during the regime of Major General Muhammadu Buhari, all but the 50 kobo banknotes were changed in order to curb currency trafficking, which was rampant at the time.
The same military leader now Nigeria’s president from 2015 to 2023 has decided again to change the bank notes for basically the same reasons. In 1991, the 50 Kobo and one Naira were changed to coins and the 50 naira note was introduced.
Due to expansion in the money supply, the 100 Naira note was released in December 1999 with a portrait of Chief Obafemi Awolowo, while the 200 Naira in November 2000 with a portrait of Alhaji Sir Ahmadu Bello.
The 500 Naira in April 2001 appeared with a portrait of Dr Nnamdi Azikiwe, and the 1000 Naira in October 2005 with the portraits of the first two Nigerian head of the CBN (Alhaji Aliyu Mai Bornu and Dr Clement Isong) were introduced as banknotes.
As part of economic reforms on 28th February 2007, the 20 naira banknotes were issued for the first time in a polymer substrate. This note is more durable than paper by not becoming soaked in liquids and is harder to counterfeit.
Also, the 50 Naira, 10 Naira and 5 Naira banknotes, along with the 1 Naira, 50 Kobo coins, were re-issued in new designs along with the introduction of the 2 Naira coin. Following the successful performance of the 20 naira banknotes, 50 Naira, 10 Naira and 5 Naira banknotes were converted to polymer substrate on 30th September 2009.
As part of its contribution towards Nigeria’s 50th-anniversary independence celebration and the country’s 100 years of existence, the CBN issued a 50-Naira commemorative polymer substrate banknotes on 29th September 2010, and the 100-Naira commemorative banknotes on 19th December 2014, respectively.
On a Note to End
In 1973, at the introduction of the Naira, one could sell 6 million Naira in exchange for $10 million. Then, a US dollar was equivalent to 60 Kobo. The same cannot be said in less than five decades as the Naira has lost more than 99.8% of its value against the dollar.
