N5, N10 AND N20 NOTES LOSE RELEVANCE AS INFLATION ERODES VALUE

Nigeria’s N5, N10 and N20 notes are gradually disappearing from everyday transactions as rising prices reduce their purchasing power.

A field survey across markets, shops and transport areas in Lagos found that many traders and transport workers no longer accept the lower denominations because there are few goods or services that can be bought with them.

At Ketu, a grocery trader said the cheapest items in his shop cost N50, while other traders at Ojota and Ikorodu said they had stopped accepting N10 and N20 notes altogether.

At Mile 12, a trader questioned what could be sold for N5, while a corn seller at Berger said the cheapest corn available was N200.

The decline is also evident in public transport. A commercial tricyclist said the shortest fare had risen to N200, compared with N100 the previous year, citing rising petrol prices. A bus driver at Ojota said a trip to Maryland costs N300, while shorter stops cost about N200.

Supermarkets, however, still use the smaller denominations in some transactions. Items such as milk priced at N60, N120 and N130 can require N5, N10 or N20 notes as change.

The scarcity of the notes has also been observed in banks. During visits to bank branches in the Ojodu Berger area, some cashiers said N5, N10 and N20 notes were unavailable, while another branch had only limited quantities. ATMs checked did not dispense the lower denominations.

POS operators also said the notes had become impractical because most transactions start from N100.

The N20 note once held a much more significant position in Nigeria’s currency system. It was introduced in 1977 as the highest denomination in circulation at the time, while the naira itself had been introduced in 1973.

Historical price data show how much purchasing power has been lost over the decades. In 1973, a 16-ounce loaf of bread was recorded at 10 kobo, while sugar cost 20 kobo. A tin of beans and a tin of rice each cost N5.

An 85-year-old man, Chief David Alawode, recalled buying land for N275 in 1974 and completing a four-bedroom house in Ibadan for N27,600 in 1986. He said cement cost N3 per bag and bricklayers were paid 35 kobo for a day's work.

Today, the N5, N10 and N20 notes remain legal tender, but their purchasing power has fallen significantly as the prices of goods and services have increased.

Nigeria’s headline inflation rate stood at 15.39 per cent in August 2026, according to the National Bureau of Statistics. Although the annual inflation rate had slowed slightly, consumer prices continued to rise.

The cost of a healthy diet also illustrates the change. NBS data showed that the average cost increased from N786 per adult per day in December 2023 to N1,495 in December 2024 and N1,541 by March 2026.

Economists attributed the declining relevance of the lower denominations to inflation, their scarcity and the growing use of electronic payments.

Professor Sheriffdeen Tella of Olabisi Onabanjo University said the scarcity of the notes had encouraged people to adjust prices and use goods as alternatives for change.

Other economists noted that producing low-value banknotes can be costly, while coins could be more suitable for smaller denominations because they generally last longer.

For many Nigerians, the N5, N10 and N20 notes therefore remain officially valid but have become increasingly difficult to use in ordinary daily transactions.