The naira has been at the centre of a prolonged currency crisis after the Central Bank of Nigeria announced a redesign policy in October 2022 and set strict swap deadlines for high value notes. The bank under then governor Godwin Emefiele announced the plan on October 26 2022 and set January 31 2023 as the initial deadline. New notes were unveiled by President Muhammadu Buhari on November 23 2022, and commercial banks began dispensing them from December 15 2022.
The rollout quickly strained cash supplies. The currency operations policy included the replacement of the ₦200, ₦500 and ₦1,000 notes and tight deadlines for demonetisation. The Central Bank said the move aimed to disrupt currency fraud, recover hoarded cash, and undermine criminal financing. The bank also said it wanted to improve visibility and control of money supply.
Distribution problems and a tight timetable triggered long queues, business disruption and street protests in January and February 2023. The CBN suspended some over the counter withdrawals on January 7 2023 and later ordered their resumption on February 2 2023. The swap deadline was extended on January 29 and the Supreme Court on February 8 2023 restrained the CBN from enforcing the February 10 deadline. The court later ruled on March 3 2023 that old ₦200, ₦500 and ₦1,000 notes remained legal tender until December 31 2023, a status the court reaffirmed on November 14 2023.
The crisis had economic consequences. Cash scarcity hampered informal trade and pushed many Nigerians to seek cash through pay point agents charging high fees. Electronic channels were overwhelmed. The disruption coincided with a slowdown in growth, with GDP growth falling from 3.5 percent in the fourth quarter of 2022 to 2.3 percent in the first quarter of 2023 as reported in official assessments.
Background And Exchange Rate Developments
The naira was introduced on January 1 1973, replacing the Nigerian pound at a rate of one pound to two naira. Coins and notes have evolved since then and denominations now include 50 kobo, ₦1, ₦2 coins and banknotes from ₦5 to ₦1,000. The Central Bank moved some lower notes to polymer in 2009 and later debated abandoning polymer notes. The eNaira digital currency launched in October 2021 as a state digital currency.
Policy on the naira has changed over decades. Nigeria allowed the currency to float from June 20 2016 after a period of peg. Markets reacted strongly to later policy shifts. On June 14 2023 the naira fell 23 percent to ₦600 per US dollar after the central bank abandoned a peg. The note then hit record lows of ₦853 on July 19 2023 and fell sharply again between February 1 and February 5 2024, moving from ₦898 to about ₦1,400. By July 30 2024 the currency traded near ₦1,600. Official and parallel market rates diverged in subsequent years, with NAFEM and parallel market figures reported in 2025 showing rates in the mid one thousands per US dollar.
