Era of Defaced Naira Notes


Sunday Ehigiator looks at the implications of the large quantities of defaced, mutilated and filthy naira notes currently in circulation

It’s lunch time in Lagos, Nigeria’s commercial capital, and the streets have come alive. Workers are enjoying midday meals and eateries are making cool business. But at a popular fast food joint on Isaac John Street, Ikeja, an argument rages between a customer and the sales representative. The bone of contention is a torn naira note the customer had been given as change after her purchases.

People intervened to settle the quarrel. But it was discovered that nearly all the lower denomination notes – particularly N100 and N200 – held by the restaurant owners were actually defaced and badly mutilated. From writings on the bills to torn and taped parts, the condition of the currency notes exposed a crisis many Nigerians are currently enduring with their country’s currency.

Health Implication

Aside the destruction of the aesthetic beauty of the naira notes, health experts say most of the mutilated currency notes in circulation harbour pathogenic microorganisms hazardous to human health. These microorganisms harbour infectious bacteria and viruses that cause health issues, such as diarrhoea, food poisoning, and respiratory problems. These diseases have been proven to be spread through the notes.

The CBN spokesperson, Mr. Isaac Okorafor, blamed the banks for the mutilated naira notes currently in circulation via his Twitter handle on February 26. But the situation doesn’t look like it will end anytime soon.

Blame Game

Okoroafor said, “Lower denomination notes have greater velocity of circulation, meaning they are frequently in use and get abused. Several factors account for the existence of worn out notes and they include the abuse mentioned above and the attitude of banks who fail to return them for reissue.”

The number of deformed naira notes in circulation in Nigeria, particularly in Lagos, is alarming.

THISDAY investigation revealed that the bad notes are given to customer in over the counter as well as Automated Teller Machine (ATM) transactions. They disburse dirty and unfit notes.

Meanwhile, as the notes circulate, the commercial banks and the Central Bank of Nigeria (CBN) have been trading blames over who is responsible, directly or indirectly, for the situation.

More worrisome to bank customers is the fact that currencies dispensed by the ATM’s are been mixed-up with filthy notes. And when they take it back/inside the bank to redeposit the notes, the banks reject them.


Speaking with THISDAY, a customer of one of the popular commercial banks at FESTAC Town, who simply gave his name as Tunde, said, “ I had come here to withdraw some large amount of money, but on getting to my car, I realised that about three bundles of the entire money I received was totally damaged and unfit for use. I immediately went back to return it, but when I brought it back to them, they rejected the money and in fact, denied ever paying the money to me. But because I was in a hurry to travel down to Abeokuta same day, I avoided creating a scene in the banking hall and could not push further.”

At the front of one of the branches of a bank along Isolo Road, another bank customer simply identified as Rodiat told THISDAY that she went to deposit money that she had just withdrawn from the bank’s ATM, but the teller rejected some notes and told her that if she collected them, the amount would be deducted from her salary.

She said, “I withdrew N100,000 from the ATM just now, almost nine thousand naira from the money was very bad. So, I took it back with the aim of re-depositing it and withdrawing again from another ATM, because the notes were too weak and some dirty. In fact, it wasn’t just me that had same complaint. Another customer also had same experience with me but when we got to the bulk room, the lady I met rejected the notes. I even told her I just got it from their ATM but she refused to take it back.”

THISDAY checks carried out on customers in 30 branches of 15 different banks in Lagos, which included the top five leading banks in Nigeria, showed that there were more dirty notes than clean ones in circulation.

Legal Consequence

A bank customer and lawyer, who preferred anonymity, expressed serious worry about the alarming amount of dirty and mutilated currency notes in circulation, described it as a national embarrassment, adding that despite the arrest and subsequent prosecution of the culprits, the trend seems to have no end.

He alleged, “There is still a cartel in CBN and commercial banks, which make brisk business recycling old naira notes meant for destruction. They enrich their bank accounts and acquire properties through these illegal proceeds by converting the equivalent of the mutilated notes into their accounts and selling printed mint, meant for customers, to touts and hawkers.

“Section 21(4) of the CBN Act of 2007 makes it a punishable offence for any person to hawk, sell or trade in naira notes, coins or any other issued by the apex bank.

“Most of the bad notes are already torn beyond recognition and the amount CBN charges commercial banks is too small to warrant such national embarrassment. Some of these notes can be compared to paper only fit for trash. The fact that they are still been exchanged as legal tender is so surprising.”

While calling on the apex bank to find ways of taking them off circulation, he said the shocking thing he discovered was that commercial bank’s tellers were using Sellotape to fix some of the bad naira notes.

“Would you believe that I apply Sellotape every now and then before I can spend this money, and I thought it was just us until I saw some bank tellers doing same inside the bulk room of a banking hall. Just last Sunday, I still did it for a naira note that was spoilt beyond recognition which I received from a conductor but couldn’t spend it as I was embarrassed by a trader I tried spending it on. CBN should simply do something about this problem; it is simply making a bad statement about us as a country and painting our nation black,” he lamented.

CBN’s Reaction

There are allegations that the CBN charges banks for the unfit notes when returned for possible substitution. This is despite the fact the CBN spokesman has constantly debunked that the apex bank charges for exchange of defaced notes, he said banks have intentionally refused to sort the dirty and unfit notes and return them to CBN. He said the banks chose to mix them up along with better notes when returning it. He said the banks only get charged when they do not sort the currency notes before returning them to the CBN.

Okoroafor said, “They are playing tricks. They will see unfit notes and re-issue them again, because they don’t want to make investments in sorting the money. It is their duty to return unfit notes to us and we will replace them with new ones. If banks sort the money before bringing to CBN, we don’t charge them, but if they don’t, we will sort and charge them. It is only when they mix up the unfit and good ones together, which is what they do, that we charge them for sorting. But it is our duty to issue new notes in place of the unfit and that we have been doing.”

He further added that the problem for rejection should not be based on the dirtiness of money, but its serial number. According to him, “If the numbers are complete, no bank has any right to reject the currency, no matter how dirty it is.” He likewise advised that anybody with such complaints to direct it to CBN’s consumer protection department through, stating the name of the bank.”

Shortage of Small Denominations

Beyond the issue of defaced notes, another boiling concern for the nation’s legal tender is the shortage of small denominations. This shortage is said to be a fall out of the high rate of defaced notes in circulation. With these defaced notes in circulation, the good ones are often scarce and hard to come by. Expectedly, these shortages are said to be gradually affecting commercial activities and transactions in the country, thereby crippling the economic activities of the middle and low-income earners. Most of the times, the resultant effect is that it breeds disagreement between service providers and customers, most especially between transporters and passengers.

Austin Akele, a tricycle operator in Lagos explains that he usually charges his passengers according to their distance, but most operators of tricycle charge N50 for short trips, adding, “it is always a problem, especially, in the morning hours, to get passengers, who would pay you the exact fare. They will give you N500 or N200 for a short trip of N50, and you would be looking for change. Even petrol stations, which used to be our go to spot for change, don’t have to give us these days.

“This usually causes delay in my work, as I would most times spend too much time searching for change, because passengers wouldn’t let go of the change and I can’t also carry them for free. The worst that sometimes happen so to avoid the delay is that I always insist and ensure that only those that has the exact fare I am charging enters, otherwise, I don’t allow them board my tricycle.

“Another option for me is to pair passengers with a bigger denomination which totals the amount I owe them. I leave them to do calculations while I continue with my business for the day.”

For Akintan Oloni, the issue with the shortage of small notes is its overlapping influence on the cost of food and transportation. She said, “Of recent, food spices we usually buy for N5 or N10 are no longer sold that way. If at all they sell, it now goes for three for N50 or sometimes five for N100. This is because they usually don’t have change to give to consumers that come to by little quantity, so they increased the price to a round figure. They are not to blame but the unavailability of smaller notes.

“Before a customer buys something in the market these days, the seller will ask whether the customer has change. Very often, the customers, just like me, have to buy what I never intended to buy because of change. This is really affecting the cost of living, and the government must speedily do something about this.”

Likewise, Salome Okon, who owns a grocery store stated that in the absence of smaller denomination currencies, the grocery shops in his vicinity realised a unique way to address the issue by offering chewing gums and sweets to balance-up consumers change, even though most times, it’s against the consumers will.

Money Vendors

Another factor which has been blamed for the recent defaced naira notes in circulation and the subsequent shortage of lower denominations is the prevalence of money vendors. This group of people buy new naira notes and sell only at ceremonies and functions, thus making it difficult for new notes to circulate.

Recently, a joint raid carried out by the State Criminal and Investigation Department (SCID), Panti, Yaba and the Central Bank of Nigeria, resulted in the arrest of 12 of such suspects and the recovery of their exhibits (currency for sale). The suspects, all female, were picked up at different parts of Lagos, for allegedly abusing the Naira by involving themselves in the buying and selling of new currencies.

According to CBN, the raid was one of the series of the clampdown on those who illegally obtain and sell new currencies, a criminal act, which contravenes Section 21 of the CBNAct, 2007. Some of the suspects were Fausat Jimoh, Bisoye Oyegbile, Balikis Ajadi, Bisola Amoru, Abidemi Oladejo and Ajoke Suraj, admitted that they sold mint naira currencies at social events.

The CBN team that led the raid stated, “We are clamping down on those abusing our currency. It is an offence to sell Naira notes at weddings or any gathering. It contravenes the CBN Act. We are going to get to the root of it because the offence is punishable by N50,000 fine, or six months imprisonment or both. No good country would allow its currency to be abused in anyway. That’s what we are guiding against. The CBN is out to enforce the law and we would give them the necessary backings. We are the apex bank are targeting some of our workers and Deposit Money Banks (DMB), as those fueling the illegal trade.”

During the recent clampdown in Lagos which was monitored by THISDAY, the CBN team said the naira merchants who hawk money at parties and ceremonies are not the real targets because if they don’t get the mint notes, they won’t be able to sell it.

About this issue, a CBN source who pleaded anonymity, explained that the concern now should be centered on preserving the currency and the law enforcement agencies being alert to their duty. Stressing that notes are being destroyed by the activities of money hawkers, who make quick trading of the currency at various party centers across the country.

The CBN Act 2007, Section 21, sub-section 3 and 4, says, “For the avoidance of doubt, spraying of, dancing or stepping on the naira or any note issued by CBN during social occasions or otherwise howsoever, shall constitute an abuse and defacing of the naira or such note and shall be punishable under Sub-section (1) of this section.

“It shall also be an offence punishable under sub-section (1) of this section for any person to hawk, sell or otherwise trade in the naira notes, coins or any other note issued by the bank.”

Investigation reveals that clean naira notes, which are sold at parties in many Nigerian cities, attract as high as 25 per cent cost above the original value of the bills being exchanged. For instance, N750 new notes can be sold for N1000 old notes.

Many believe the federal government needs to initiate proactive strategies for identifying and prosecuting those responsible for the scarcity of the lower denominations of the naira in accordance with the law.