CBN attributes naira note scarcity to digital payment shift
The Central Bank of Nigeria has linked the disappearing N100 and N200 notes to a structural migration toward electronic payments, offering macro validation for the fintech sector while flagging prolonged inflation headwinds.
Olayemi Cardoso, governor of the Central Bank of Nigeria, dismissed rumours of a withdrawal of N100 and N200 notes following a Monetary Policy Committee meeting in Abuja on Tuesday. He attributed the scarcity of lower-denomination currency to changing consumer behaviour and a rapid migration to electronic payment channels.
For investors in Nigeria’s financial technology sector, the governor’s comments offer explicit central bank validation of a structural shift. “As more people adopt digital payment channels, the demand for coins and lower-denomination notes naturally declines,” Cardoso said. “If there is less demand for them, there is less need to print and circulate them in large quantities.”
The reduced circulation is also a direct consequence of the country's macroeconomic pressures. Inflation and the depreciation of the naira have severely eroded the utility of small bills for everyday market transactions. “We must also acknowledge that currency devaluation has affected the purchasing power of lower-value notes,” Cardoso said. “That is a reality.”
Inflation and FX outlook
The central bank moved to prevent market disruption by confirming the notes remain legal tender. “Unless the central bank states otherwise, Nigerians should assume that all existing denominations remain legal tender,” he said, urging businesses to continue accepting the cash. Small traders and transport operators have recently struggled to access physical cash for daily operations.
On broader macroeconomic policy, Cardoso reiterated a commitment to achieving single-digit inflation, though the timeline has shifted. He noted the country had achieved 11 consecutive months of disinflation before being hit by prolonged external shocks. “From every indication, we expected that by early 2027 we would be where we wanted to be in terms of inflation, with a path towards single-digit inflation,” Cardoso said. “Unfortunately, we have experienced external shocks that were not anticipated and have lasted much longer than anyone expected.”
The governor also addressed recent International Monetary Fund assessments that the naira is undervalued, with the fund estimating a fair value of around N1,150 to the dollar. Cardoso rejected the idea of setting a specific target, pointing instead to market fundamentals like oil exports, foreign direct investment and import substitution. “Our position remains the same. We will continue to ensure that Nigeria has a foreign exchange market that is transparent, liquid and based on a willing-buyer, willing-seller framework,” he said.
Improved liquidity in the foreign exchange market is a tangible result of this approach. Cardoso highlighted that daily trading turnover has recently exceeded $1 billion, a metric that will reassure foreign portfolio investors looking for viable exit routes and transparent price discovery in Nigerian assets.
