The Central Bank of Nigeria has said it will start printing the naira in paper notes in 2014.
It signed a deal in 2006 with Australia’s Securency International to print lower more-circulated units of the naira in polymer, while higher denominations were kept in paper form.
But six years after and following allegations that the manufacturer had bribed foreign officials to secure contracts, including in Nigeria, the CBN said it was being forced to reverse the policy.
A report by AFP on Tuesday quoted the spokesman for the CBN, Mr. Ugochukwu Okoroafor, as saying,
“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.
“We only used polymer for N5, N10, N20 and N50, while N100, N200, N500 and N1,000 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, which are in use in 23 countries around the world, including Australia, could last longer than traditional cotton-paper notes.
But the CBN said there had been a public 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 earlier this year, said it did not comment on clients or their business but added that a number of countries with hot and humid climates used their product.
“We have had no issues of premature ink wear or colour fading in these markets,” a spokesperson said in an e-mailed statement.
The report said Nigeria, with a predominantly cash-based economy, was looking to increase people’s use of electronic payment methods such as credit cards, online trading and introducing cash-point machines in a bid to try to reduce the amount individuals could carry around.
However, there are concerns that switching back to paper notes is a sign of a lack of a coherent policy.
“My concern is that Nigeria is fond of policy somersaults,” said a former banker, Mr. Moruf Akamo.
He also said, “What becomes of the initial investment in the polymer technology, considering that the notes have been in circulation for only six years after their adoption in 2007?”
Akamo said the CBN should have done more research to ascertain the feasibility of polymer notes before starting the project.
“Why is Nigeria going back and forth? It’s time our policy makers got their acts together and do what is right for this country,” he said.
A treasury manager at a commercial bank in Lagos, Mr. Yemi Adegbola, advised the central bank against spending money to print paper notes, which could 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.
“It’s not easy to fake polymer notes like paper notes,” he said.
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