N5, N10, N20, N50, and N100 notes Remain Legal Tender in Nigeria, Says CBN Governor Cardoso

Lower Naira Denominations Remain Legal Tender, Says CBN Governor Cardoso

Lower Naira Denominations Still Legal Tender in Nigeria – CBN Governor Cardoso Confirms

The Central Bank of Nigeria has confirmed that N5, N10, N20, N50, and N100 notes remain legal tender. CBN Governor Olayemi Cardoso explains why the lower denominations are scarce while the Monetary Policy Committee retains the interest rate at 26.50%.

Lower Naira Denominations Still Legal Tender in Nigeria, CBN Governor Cardoso Clarifies

The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has reassured Nigerians that all lower naira denominations—including N5, N10, N20, N50, and N100 banknotes—remain legal tender and can still be used for all financial transactions across the country.

Cardoso made the clarification during a press briefing after the 306th Monetary Policy Committee (MPC) meeting held on Tuesday. His statement comes amid widespread public concern over the apparent disappearance of smaller naira notes from circulation and speculation that some of the denominations may have been withdrawn.

The CBN Governor emphasized that the apex bank has not announced the withdrawal or demonetization of any of the lower-value banknotes. According to him, they remain valid and should continue to be accepted nationwide.

His remarks provide much-needed clarity for millions of Nigerians who have struggled to find lower denominations in daily transactions, particularly in local markets, transportation, and small retail businesses.

Cardoso: Lower Denominations Are Still Valid

Responding to questions from journalists, Cardoso dismissed concerns that the lower naira notes had lost their legal status.

He explained that the Central Bank has never issued any directive declaring the notes invalid.

> "They are still legal tender. To the extent that the Central Bank has not said otherwise, please assume they are legal tender."

The statement confirms that Nigerians are free to use N5, N10, N20, N50, and N100 notes for purchases, payments, and other financial obligations.

This clarification is particularly important because many businesses and transport operators have increasingly refused to accept some lower denominations due to their scarcity and perceived lack of value.

Why Are Lower Naira Notes Scarce?

While confirming their legal status, Cardoso acknowledged that many Nigerians rarely encounter these denominations in circulation.

According to him, the primary reason is the interaction of demand and supply within the economy rather than any policy decision by the Central Bank.

He stated:

> "The question as to why we do not have as many of them in circulation as may be perceived is a question of demand and supply, quite frankly."

This means the reduced availability of smaller banknotes is largely influenced by economic behavior rather than deliberate withdrawal by the apex bank.

Understanding Demand and Supply in Currency Circulation

Currency circulation depends heavily on how often people use, save, or replace specific denominations.

Several factors contribute to the scarcity of lower-value notes:

1. Inflation Has Reduced Purchasing Power

Nigeria's inflation has significantly reduced the purchasing value of smaller denominations.

Today, N5 or N10 buys far less than it did years ago, making them less useful for everyday purchases.

As prices continue to rise, consumers and businesses naturally rely more on higher-value banknotes.

2. Wear and Tear

Lower denominations change hands more frequently than larger notes.

Because of constant use, they deteriorate faster and often become too damaged for circulation.

The CBN continuously replaces worn-out notes, but demand often exceeds replacement speed.

3. Digital Payments

Nigeria has experienced rapid growth in electronic payments.

Mobile banking, transfers, QR payments, POS terminals, and fintech applications have reduced dependence on physical cash, especially smaller denominations.

4. Hoarding and Limited Redistribution

Some lower notes remain trapped within informal sectors where they are rarely redeposited into banks, reducing their circulation.

Why Lower Denominations Still Matter

Although inflation has reduced their purchasing power, smaller naira notes remain essential for many sectors of the Nigerian economy.

These include:

Public transportation

Local markets

Roadside vendors

Religious offerings

School transactions

Rural communities

Small businesses

Many Nigerians still depend on exact change during daily transactions.

Without lower denominations, businesses often round prices upward, leading to unnecessary increases in consumer costs.

Impact on Small Businesses

Small and medium-sized enterprises (SMEs) are among those most affected by the scarcity of lower denominations.

Retailers frequently struggle to provide change to customers.

This often results in:

Forced price adjustments

Customer dissatisfaction

Loss of sales

Increased reliance on digital payments

Many traders now encourage customers to transfer money electronically instead of paying cash when exact change is unavailable.

Transport Sector Feels the Impact

Commercial transport operators also experience challenges due to the shortage of smaller notes.

Passengers frequently encounter situations where drivers cannot provide balance after payment with larger denominations.

This has led to:

Frequent disputes

Delays

Price rounding

Increased use of mobile transfers

Cardoso's clarification may encourage wider acceptance of lower notes whenever they become available.

MPC Retains Interest Rate at 26.50%

Aside from addressing currency concerns, the Central Bank announced that the Monetary Policy Committee retained the Monetary Policy Rate (MPR) at 26.50 percent.

This marks the second consecutive meeting in which the benchmark interest rate has remained unchanged.

The decision reflects the committee's cautious approach toward balancing inflation control with economic growth.

Nigeria's Inflation Slows

The MPC's decision follows the release of Nigeria's latest inflation data.

According to official figures, headline inflation declined to 15.91 percent in June, representing continued moderation compared to previous months.

Lower inflation provides some optimism for households and businesses after prolonged periods of rising prices.

Nevertheless, inflation remains one of Nigeria's most significant economic challenges.

Why the Interest Rate Was Left Unchanged

Central banks use interest rates to influence economic activity.

Higher interest rates generally:

Reduce inflation

Slow borrowing

Encourage savings

Stabilize the currency

Lower rates generally:

Encourage borrowing

Stimulate investment

Boost spending

Support economic expansion

By retaining the benchmark rate at 26.50 percent, the CBN signaled that it wants additional evidence that inflation is firmly under control before considering future adjustments.

What This Means for Nigerians

For ordinary Nigerians, Cardoso's remarks carry several practical implications.

You Can Still Spend Lower Notes

If you possess N5, N10, N20, N50, or N100 notes, they remain valid.

Businesses should continue accepting them.

Banks Can Process Them

Banks should continue receiving these notes for deposits and transactions.

There is no expiration date attached to them.

Businesses Should Accept Them

Merchants refusing lower denominations simply because they believe they are no longer legal tender are acting based on misinformation.

Will the CBN Print More Lower Denominations?

Cardoso did not announce any immediate plan to increase production of lower-value banknotes.

However, the Central Bank continuously monitors cash circulation and replaces damaged notes as needed.

Future printing decisions will likely depend on:

Currency demand

Economic activity

Inflation trends

Cost of production

Printing low-value notes is expensive, particularly when inflation rapidly reduces their purchasing power.

Digital Payments Continue to Grow

Nigeria's financial sector continues shifting toward digital transactions.

The widespread adoption of:

Mobile banking

USSD services

Internet banking

POS terminals

Fintech platforms

QR payments

has reduced dependence on physical cash.

Nevertheless, millions of Nigerians—especially in rural communities—still rely heavily on cash transactions.

Maintaining adequate circulation of lower denominations remains important for financial inclusion.

Public Reaction

Many Nigerians welcomed Cardoso's clarification.

Across social media and financial discussion platforms, users expressed relief that lower denominations remain valid.

Some citizens, however, called on the CBN to improve their availability.

Others argued that inflation has significantly reduced the usefulness of the smallest notes, suggesting policymakers may eventually need to review Nigeria's currency structure.

Economic Outlook

The CBN's latest announcements indicate that monetary authorities remain focused on maintaining price stability while supporting economic recovery.

Key priorities include:

Controlling inflation

Stabilizing the naira

Strengthening financial markets

Supporting sustainable economic growth

Improving confidence in Nigeria's financial system

The continued moderation in inflation may provide room for future monetary policy adjustments if positive trends persist.

Conclusion

CBN Governor Olayemi Cardoso has ended speculation surrounding Nigeria's lower-value banknotes by confirming that N5, N10, N20, N50, and N100 notes remain legal tender.

Although many Nigerians rarely see these denominations in circulation, the Governor explained that their scarcity is driven by market demand and supply dynamics, not by any official withdrawal from circulation.

The clarification serves as an important reminder that all valid naira notes issued by the Central Bank should continue to be accepted across the country.

At the same time, the Monetary Policy Committee's decision to retain the benchmark interest rate at 26.50 percent, alongside easing inflation to 15.91 percent, signals a cautious but optimistic outlook for Nigeria's economy.

As digital payments continue to expand and economic conditions evolve, ensuring confidence in both physical currency and electronic payment systems remains essential for inclusive financial growth and long-term economic stability.

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