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Naira and Kobo: Historical Journey as Nigeria’s Currency

#1
Naira and Kobo: Historical Journey as Nigeria’s Currency

This Story of  Naira and Kobo is a purely historical narrative in celebration of its 40years as Nigeria’s vehicle of transaction. It however does not attempt to delve into its economic value.
While many may question the reason for celebrating such a currency that seem so scarce to the majority of the population it serves and also almost valueless, the Naira and Kobo remains one of the most indigenous currency in the world and its uniqueness is easily identifiable to Nigeria.
It is a NATIONAL symbol of unity as is the Nigerian Flag, the coat of arm etc, so let’s….
HISTORICAL BACKGROUND
MONETISATION OF THE NIGERIAN ECONOMY
Prior to the partition of Africa among the Western European countries at the Berlin Conference of 1884-85, local currencies were in use within extensive areas which were later separated into countries. These countries adopted different languages and currencies according to which European country occupies them. In the case of Nigeria, her pre-colonial currencies included Iron, tin, cattle, salt, feathers, seed of wild plants, farm products, textiles and seeds. These items were adopted as a result of her internal trade. Cowries, iron, copper bars, manila, textile, gin and tobacco were adopted as a result of her external trade. By the time Nigeria was fully under the British dominion, currencies like the British gold, silver, bronze and nickel bronze were now in full circulation.
The monetization of Nigeria’s economy followed a distinct pattern. It followed the integration of the economy into world capitalist economy. The rise and growth of international trade coupled with the colonization of Nigeria by Britain played a major role in promoting commercial relations and fostering development of a more convenient medium of exchange than the trade in barter.
Before 1900, one could conveniently say that there was nothing like a Nigerian economy prior to the emergence of the Nigerian state thus one could hardly speak of a monetary system in Nigeria. During the late 19th Century foreign coins were circulated side by side with commodity currencies. Meanwhile, the introduction of foreign coin currency into West Africa exerted pressure to establish Banks in the area. As Dr McPhee put it, “A coin currency is a sine qua non of banking” Thus the establishment of banks like the Bank of British West Africa in 1894, The Bank of Nigeria in 1899, The Anglo African Bank in 1907 and so on. However, it was not until the establishment of the West African Currency Board in 1912 that an organized financial system emerged in Nigeria.
Prior to this in 1898, because of the monopoly and successes of the Bank of British West Africa in currency operations, the colonial office nursed the ambition of sharing the profits accruing from the issue of British silver coins. Hence the Barbour Committee was set up under the Chairmanship of Sir David Barbour to look into the possibility of issuing a special silver currency for West Africa. Its recommendation was that the British silver should continue to be used and profit accrued should be shared equally between the UK Treasury and the colonial office. The Treasury rejected the proposal of profit sharing but was in favor of a separate currency for West Africa in 1902. Nothing was done to implement this proposal for another nine years.
However, in 1911, the colonial office once more set up another committee under the Chairmanship of Lord Emmot and the issue of a Separate Currency for West Africa was re-opened. The committee was to inquire into matter affecting the currency of the British West Colonies and protectorates. Its recommendation led to the establishment of the West African Currency Board (WACB) in 1912 with its headquarters in London and the Bank of British West Africa as its agent in West Africa. This was an important achievement of the British Colonial Administration.
The West African Currency Board was to perform a number of functions including controlling the supply of currency and ensuring that the currency was maintained in satisfactory condition, watching over the interests of the constituent territories as far as currency was concerned.
The Board was also responsible for minting of coins and printing of notes and shipping them from the Royal Mint into West Africa. The design of the West African Coins had a palm tree on the reverse and the image of the British King on the obverse. The coins denominations were Two Shillings, One Shilling, Six pence, Three Pence, One Penny, Half Penny and in 1918, one-tenth penny. The bank notes were in units of one pound, 10 shilling, 2 Shilling and in 1918-1919 One Shilling. In 1919, Five Pound notes were issued but withdrawn in 1923 as being too large but was reintroduced in 1953 because of the growth in the economy. The Currency board was also responsible for implementing the various defense regulation (finance) which operated during the period of the Second World War and included an operation of an exchange control and saving of hard currencies and gold.
The West African Currency Board from its inception rendered great economic services and maintained high standards of integrity. This can be judged from the fact that on the 31st December, 1956, its currency circulation had reached a peak of 125.51 million pounds.
The Currency Board died a natural death with the transfer of government from colonial masters to the individual West African countries and the establishment of the Central Bank. The Central Bank of Nigeria was created by the Bank Act of 1958 in the case of Nigeria. This Act provides that only the Central Bank of Nigeria and neither the Federal Government nor State Government nor any other person shall issue currency notes, bank notes or coins or any documents which are likely to pass as legal tender in Nigeria. The unit of currency was known as the Nigerian Pound consisted of Twenty Shillings, each shilling equal to Twelve pennies. One Nigerian pound was equal to one Pound Sterling.
The Central Bank undertook the function as a Bank of Issue on the 1st of July 1959. By the end of 1959, some £46 million Nigerian currency notes had been issued and all but £1.5 million of the West African currency had been withdrawn from circulation as at March 1960 and on July 1, 1962, the Board’s Currency ceased to be a legal tender.
To facilitate public acceptance of the National currency, intensive advertising campaign to familiarize the public with the impending changes and date of issue were mounted. Posters displaying specimens of the new notes were mounted. Reproductions of coins with information on the new money were distributed to the public. With an organized monetary system in place, the process of monetization was complete.
Since her independence in 1960, the country’s monetary units have passed through different stages of transformation. On the 1st of July 1959, the Central Bank of Nigeria issued the Nigerian Currency 5Pound(Blue/Purple),1Pound(Red),10Shillings(Green),5 Shillings(Purple) in notes and 2Shilling, 1Shillings,6pence,3pense,1pence andOone and half Pence in coins.
In 1965, after Nigeria became a Republic the notes were changed to reflect the Country’s new status.
In 1968, as a war strategy, the notes were changed again, this time in colours- 5Pound was changed from Blue/Purple to Mid Brown, 1Pound from Red to Dark Brown, 10Shillings from Green to Dark blue and 5Shillings from Purple to Green.
A major change took place in January 1973 as it involved currency notes and coins as well as the introduction of Naira and Kobo as the major and minor units of the Nigerian currency and the phasing out of the pound system. The denomination introduced were 5k, N1, N5 and N10 as bank notes and coins denominations were 1/2 k, 1 k, 5k, 10k and 25k.
The story of the Naira and Kobo began with the effort to decimalize the Nigerian currency in 1973, January 1. The efforts to decimalize the Nigerian currency dates back to 1962 when the Federal Minister of Finance appointed the Decimal Currency Committee to study and report on the desirability of a decimal currency system for, the country. The committee submitted its report which favored decimalization in July 1964 but nothing was done to implement it as the country was overtaken by the political crisis in 1966 and subsequently the Civil War. However, on March 31, 1971 the then Head of State, General Yakubu Gowon announced in his budget that Nigeria would convert to the decimal system on January 1, 1973. This was followed in May 1971 by the promulgation of the Decimal Currency Decree No. 21, which gave effect to the currency change over from the £. s. d. monetary system. The Decree among other things stipulated that the unit of currency in Nigeria would be the Naira which shall be divided into 100 kobo. From the memoranda expressed by public opinion that was received by the committee, the 10s, cent as the desirable decimal currency system thus making the Naira and Kobo system a two-place decimal system in which Naira is the major unit’. One Naira equals Ten shillings in the old Nigerian Pounds currency system. The task of informing and launching the currency, of educating the public to the use of the new currency units and the new coins were one of the most important functions of the board. The Board carried out this task by publishing descriptions, denominations, conversion tables and specimens of the new currency. These were freely distributed through banks information centers and schools. The communications media were also used to keep the public informed on the impending changeover. Finally, the names and symbol-Naira(N) derived from the River Niger that runs across the country and Kobo(K)derived from the native name for penny among other options was arrived at as the committee considered it an opportunity of a change over to decimal currency to adopt indigenous names for the major and minor units of the new currency.
NAIRA AND KOBO: BIRTH AND FEATURES
The new decimal currency, Naira and Kobo were introduced on the 1st day of  January 1973 with the denomination notes consisting of 50k, NI, N5,N10 and five denomination of coins of 1/2k1 k, 5k, 10k and 25k. The 5k and 10k were introduced earlier on July 3, 1972; it circulated side by side with and was exactly convertible to six pence and one shilling of the old pounds system. On issue, the coins were popularly received and characterized as the first Nigerian coins which did not carry the head of a British Monarch. The size of the NI0 issued on the 1st day of January 1973 was 157x90mm. Its predominant was carmine and dark blue in front and carmine at the back. The front had the vignette of the Central Bank building and the back – a pictorial scene of an impressive view of the Kainji Dam. Distinctive variations were adopted by the use of different geometric elements and Nigerian-inspired ornament”. The size of the N5 was 151 x84mm, its colour grey, blue and green in front and at the back – grey blue. It also had the picture of the Central Bank building in front and a hand engraved vignette which illustrates an operation traditional associated with the palm oil industry. The size of the N1 notes was 137x78mm. Its colour red and brown in front and red at the back. The picture of the Central Bank building in vignette that depicts a typical scene from the groundnut industry. The size of the 50k note was 127x731mn with its colour blue and purple in front and brown at the back. The picture of the Central Bank building in front and a pictorial subject that represents the timber industry. Features common to these notes were the Coat of Arms of Nigeria placed centrally below the watermark panel at the back: the picture of the Central Bank building in front, the serial number at the top (far right) and the bottom, the signatures of the Governor and Deputy Director Domestic Operations of the Central Bank amongst other things”. The coins issued in 1973 were the same in dimension. The 25k, 10k and 5k were issued in silver, the 1k in bronze and 1/2 k in copper!”
MAJOR CHANGES IN NAIRA AND KOBO, 1973 – 2009
As earlier stated the Naira and kobo in 1973 became Legal Tender, however, on 11th day of February 1977, a new banknote denomination of the value of N20 was issued in addition to the 1973 currencies. Thus the N20 note was the highest denomination. The N20 note bore the portrait of the late Head of State, General Murtala Muhammed (I938 – 1976) who was the torch bearer of the Nigerian revolution which began on 29th July 1975 and was declared a national hero on October 1, 1978.
On 2nd of July 1979, the N1 note was introduced and the N5 and N10 notes were redesigned. The N1 note bore the portrait of Mr. Herbert Macaulay (1864-1946), the father of politics in Nigeria and one of the architects of Nigerian independence in front and the Festac symbol at the back. The colour in front was red. The N5 note bore the portrait of Alhaji Sir Abubakar Tafawa Balewa (1912 – 1966) first PrimeMinister of Nigeria in front and Nkpokiti drummer at the back. Its colour in front was green and at the back was dark green. The N10 note bore the portrait of Dr. AlvanIkoku (1900 – 1971), a prominent educationist in front and Fulani milk maids at the back. The sizes were all the same (151 x 78).
In 1984, another change was madein the colours of the existing currencies. This timeno new denominations were introduced. The N20 note, which was yellow, was changed to green colour, while N5 which was green, was changed to deep pink colour. The N10 note changed from pink to red while the N1 note, which was red was changed to yellow.
In 1989, the 5k and 10k coins were phased out and in 1991; N50 note was introduced while 50K and N1notes were changed to coins.
The next change in the Nigerian currency system occurred in 1999, this time the N100 note was introduced in December 1999, the N200 note in November 2000, the N500 note in April 2001 and the N1000 in October 2005.
Another change came in May, 2007 in the size, hue and particulars of the N5, NI0, N20, and N50 notes. Also new was the introduction of N2 and the reintroduction of N1 and 50k coins. The new N20 note came out not in paper but in polymer. All redesigned notes are smaller than the old ones. The new notes have no naira sign. The values of the notes hitherto written in Hausa in Ajami (a variety of Arabic calligraphy) script are now written in Hausa, Igbo and Yoruba in Roman. The Map of Nigeria in National colours is at the back of the notes. The notes have vertical and horizontal numbering. The CBN logo replaces the eagle in the watermark. The Coat of Arm is on the back, the “Central Bank of Nigeria” and logos are on the front. The N5 note still bears the portrait of Alhaji Tafawa Balewa on the front and also has a Diamond symbol for the visually impaired. At the back is a portrait of traditional drummers retained from the old note and a security thread with CBN written on it. The N10 note also still bears the portrait of Alvan Ikoku on the front and a square symbol for the visually impaired. At the back is the security thread with CBN written on it and the portrait of the milkmaids retained. The N20 note still bears the portrait of Late General Murtala Mohammed, circle symbol for the visually impaired and a clear window instead of a watermark in front and at the back is the portrait of Ladi Kwah, a famous potter, and an oval shaped green area which changes to gold when titled. The N50 note still bears the portrait of the people of the three major ethnic groups in Nigeria, a light blue metallic stripe and a triangle symbol for the visually impaired in front and the portrait of fishermen and a security thread with CBN on it.
In September 2009, all other lower denominations were printed in polymer with all features intact.
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#2
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