Nigeria to return to paper banknotes

Nigeria will revert to paper banknotes in a policy switch that bucks a trend around the world for tougher polymer-based currency.


The Central Bank of Nigeria (CBN) signed a deal in 2006 with Australia's Securency International to print more-circulated lower units of the naira in polymer, while higher denominations were kept in paper form.

But six years later - and after allegations the manufacturer bribed foreign officials to secure contracts, including in Nigeria - the CBN said it was being forced to reverse the policy.

"Polymer has been on a test run since 2007. This explains why we did not go the whole hog by printing all the notes in polymer," CBN spokesman Ugochukwu Okoroafor told AFP.

"We only used polymer for N5, N10, N20 and N50, while N100, N200, N500 and N1000 are in paper form.

"We soon discovered that the (polymer) notes easily fade out because of our peculiar hot climate in Nigeria ... making them look tattered when in use over time."

Earlier experiments indicated that the polymer-based notes, in use in 23 countries including Australia, could last longer than cotton-paper notes.

But Nigeria's central bank said there had been outcry about the poorer quality of some of the new currency in circulation.

Securency International was reported to have supplied 1.9 billion of its Guardian brand polymer-based notes to Nigeria between 2006 and 2008.

In the wake of the bribery claims, the Reserve Bank of Australia sold its 50 per cent stake in the firm.
Innovia Security, which bought out Securency International this year, said a number of countries with hot and humid climates used its product.

"We have had no issues of premature ink wear or colour fading in these markets," a spokesman said in a statement.

Nigeria, whose economy is predominantly cash-based, is looking to increase people's use of electronic payment methods such as credit cards and online trading and is introducing automatic teller machines to try to reduce the amount individuals carry around.

Yemi Adegbola, a treasury manager at a commercial bank in Lagos, advised the central bank against spending money to print paper notes, which can degrade quickly with daily handling and the tropical climate.

"The trend worldwide is to embrace polymer. I wonder why Nigeria's case is different?" he added, claiming that polymer was less susceptible to forgery.

New paper notes will be printed by the state-run Nigerian Security Printing and Minting Company rather than abroad.


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