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The Central Bank of Nigeria (CBN) 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 on, the CBN is being forced to reverse the policy. Securency International was reported to have supplied 1.9 billion of its Guardian brand polymer-based notes to Nigeria between 2006 and 2008.
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 Nigeria's central bank said there had been a public outcry about the poorer quality of some of the new currency in circulation. New paper notes will be printed locally by the state-run Nigerian Security Printing and Minting Company rather than abroad.
In addition, allegations persist that the manufacturer had bribed foreign officials to secure contracts, including in Nigeria. In the wake of the bribery claims, the Reserve Bank of Australia sold its 50 percent stake in the firm.
"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," said spokesman Ugochukwu Okoroafor. "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."
"We have had no issues of premature ink wear or colour fading in these markets," said a spokesman for Innovia Security, in an emailed statement. The company bought out Securency International earlier this year.
However, there are concerns that switching back to paper notes is a sign of a lack of a coherent policy. Yemi Adegbola, a treasury manager at a commercial bank in Lagos, advised the central bank against spending money to print paper notes, which can degrade quickly with daily handling and the tropical climate. "I can't see any logic in going back to paper notes," said Adegbola. "The trend worldwide is to embrace polymer. It's not easy to fake polymer notes like paper notes," he added, claiming that polymer was less susceptible to forgery.
Ufoma Okeke, a 25-year-old business administration student, said the CBN should not waste scarce resources on paper banknotes. "Nigeria is broke. The states are finding it difficult to pay their bills. We can better utilise our limited resources rather than waste such on a white elephant project," she cautioned.
The CBN, however, said the switchover, likely from the middle of 2014, would not be a drain on the country's finances and would be gradual. "What we have decided is to switch over to paper notes when we next want to print naira notes," said Okoroafor. "When the polymer notes in circulation become tattered and ready to be disposed of, we will start the printing of paper notes."
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