By Ummie Kabir.
At Yaba Market on a busy Tuesday morning, a woman selling vegetables held out a handful of Naira notes to a second-hand clothes seller. The clothes seller instantly handed back two of the notes.
“Bring another one, this one don old. I no dey collect this type again.”
The vegetable seller protested. The notes were not fake. They were not torn in half. They were simply the standard Naira notes, the ones Nigerians have used over the years. But in that moment, they were worthless, not because the Central Bank of Nigeria (CBN) had withdrawn them, but because a rumour had withdrawn them.
That small argument, repeated in buses, shops, motor parks and point of sales (POS) stands across the country, is now a national problem. In recent weeks, reports of traders rejecting certain denominations of the Naira, especially the standard N100 note, have forced the Central Bank of Nigeria to speak out again, warning that the practice is unlawful and dangerous.
And the Bank is right. If we allow every trader to become his own central bank, deciding which genuine note is valid and which is not, we will destroy the very idea of money.
Legal tender is not a suggestion. It is a legal command. When the CBN issues a banknote, it is backed by the Federal Republic of Nigeria. It must be accepted for payment of debts, for goods and services, everywhere in the country, until the CBN formally withdraws it.
Section 20(5) of the CBN Act, 2007 is clear, “any person who rejects any banknote or coin which is legal tender in Nigeria is guilty of an offence and is liable to a fine or imprisonment.”
In its latest clarification, the CBN reiterated that both the standard N100 banknote and the commemorative N100 banknote remain legal tender and must be accepted for transactions nationwide.
The commemorative note, introduced in 2014 to mark Nigeria’s centenary, was never meant to replace the standard note. It was meant to circulate alongside it.
The same principle applies to all other denominations. The CBN has repeatedly stated that every banknote issued by the Bank remains legal tender and should not be rejected by anyone. A note does not lose its value because it is old, faded, or because social media broadcast says so. It loses its value only when the CBN says so.
The recent rejection was merely born out of confusion, fear and trauma due to misinformation. Social media has become a factory of fake circulars with all manner of baseless rumours like introduction of N5,000 and N10,000 notes, fake withdrawal notices, fake deadlines.
Memebers of the public are not to be blamed for this new wave of rejection as there is the scar of the naira redesign of 2022-2023. Nigerians still remember the cash scarcity, the long queues at ATMs, the old notes that suddenly became useless, and the Supreme Court intervention that followed. Citizens learnt a bitter lesson then.
Importantly, there is the genuine problem of worn notes. Many N100, N50 and N20 notes in circulation are dirty, torn and difficult to verify. A trycle rider at night cannot tell if a faded note is genuine or counterfeit. Rather than risk it, he rejects it.
But understandable does not mean acceptable. When a trader rejects a valid note, the cost does not disappear. It is transferred to the poorest person in the chain as the woman selling vegetables who cannot afford to lose N100, the student who is stranded because a driver refused his fare, the pensioner who is told her money is no longer money.
However, beyond the law, there are three practical reasons to accept legal tender because it keeps commerce moving. Nigeria’s informal economy runs on cash, especially small denominations. If N100 is rejected, how do we buy satchet water, pay for short bus trips, or give change for N1,000? The economy stalls at the bottom.
Also, it protects confidence in the Naira as a currency is only as strong as the trust people have in it. The CBN itself has warned that rejecting the standard N100 note undermines confidence in the national currency. If Nigerians reject their own Naira, why should foreigners trust it?
The informal sector is quite huge and account for 58 per cent of the gross domestic product (GDP) and despite the penetration of electronic payment now about 46 percent, cash is still “king”. As such there is need to protect the vulnerable class. When cash is rejected, it is the poor who suffer most.
At this juncture, warning alone may not be enough. The CBN has warned before, in 2023, in 2024, and again in July 2026. The Bank must now move to enforce the law since it has indicated that it will not hesitate to apply appropriate enforcement measures against any person or entity found to be in breach. That must be seen to happen.
The CBN should review its currency indent and introduce new and fit currency notes into circulation. People reject dirty notes because they look fake. The CBN must ensure Deposit Money Banks actually dispense clean N100, N50 and N20 notes through ATMs and over the counter, and must penalise banks that hoard lower denominations or reject dirty and mutilated notes from customers. The CBN had earlier directed banks to accept such notes and forward same for replacement, but many banks still refuse because handling charges.
There is need to launch a sustained campaign in local-languages. To complement press statements, the CBN should collaborate with market associations, road transport workers, traditional rulers, radio stations in Hausa, Yoruba, Igbo, Pidgin and possibly other local languages, enlighten citizens in simple terms not only to accept naira notes as legal tender, but also keep them clean.
While adoption of the alternative payment channels, particularly electronic payment, is quite encouraging, efforts should be made to speed up cash alternatives without punishing cash users. Until digital payments work everywhere, real time, cash remains king for millions. The goal should be choice, not coercion.
Ultimately, the Naira is not just the CBN’s property. It is our common symbol of sovereignty. Traders must accept what the law says is money. Banks must accept what customers bring. And the public must keep the notes clean.
Comment here