What is the NGN (Nigerian Naira)
NGN is the currency abbreviation for the Nigerian naira (NGN), the official currency for the Federal Republic of Nigeria. The Nigerian naira is made up of 100 kobos.
As the most populous country in Africa, Nigeria is known for its widely diverse population. The inhabitants of Nigeria include hundreds of different ethnic groups that speak dozens of languages. The single consistent currency system is one of the unifying elements that all residents of the nation share, and is a part of daily life that people from all regions of the country have in common.
BREAKING DOWN NGN (Nigerian Naira)
The Central Bank of Nigeria (CBN) manages and distributes the Nigerian naira (NGN). The currency serves as legal tender in the Federal Republic of Nigeria. One of the primary roles of the CBN is to control the inventory of NGN currency in circulation at any given time, as well as to ensure the country's financial security and keeping prices stable.
Also in 2016, the Central Bank of Nigeria stopped the naira from floating in the currency markets. Instead, the CBN sets the money's exchange rate. The U.S. dollar is the most popular foreign exchange currency pair involving the NGN. Nigeria's primary trading and investing partner is the United States.
Nigeria is located on the West Africa coast and derives its name from the Niger river which runs through the area. The region is home to many ancient and prosperous societies before falling under British colonial rule in the 1800s. In 1960, the territory became the independent Federation of Nigeria. Shortly after that, the country spiraled into a civil war which lasted until the 1970s. France, Egypt, Britain, and the Soviets meddled behind the scenes in the country during the years of war.
Until 1999, the leadership of Nigeria alternated between elected officials and military dictatorships. Military rule, political corruption, and mismanagement damaged the economy and ran up massive foreign debt. Nigeria defaulted on its debt as oil prices fell in the 1980s. Renegotiation of the debt occurred in 2005, and the nation became the first African country to pay off its debt in 2006.
Widespread and rampant inflation has been a significant problem for the Nigerian economy. The inflation rate in Nigeria soared to an all-time high of nearly 48% in January 1996. Since that time, inflation averages around 12.5 percent. Improvements in controlling inflation have been attributed, at least in part, to fewer increases to the cost of critical staples such as utilities and food. However, the CBN has continued to maintain the primary interest rate at 14 percent, which government officials say is an effort to help keep inflation under control. The interest rate has been 14% since July 2016.
According to World Bank data, Nigeria is a lower-middle income emerging market which is still struggling with the impact of inflation. The country experiences an 11.1% annual inflation rate and has a gross domestic product (GDP) growth of a 0.8%, as of 2017, which is the most current year of available data.
Features of the Nigerian Naira
Before the NCN, Nigeria used an undecimalized system of pounds, sterling, and pence, which was a monetary system used across Europe and the British Empire. Today, there are only a few remaining currencies that do not have a base-10 system of division or that divide the currency into ten equal units.
The NCN replaced the country's use of the pound in 1973. Pound to naira conversion was at a rate of 2:1, or 2 naira for every pound. By 2008, inflation in Nigeria had dramatically devalued the currency. The government made plans to once again devalue or redenominate the currency at a rate of 100 old nairas to 1 new naira until the country's president canceled this action.
Naira coins and notes are minted by the Nigerian Security Printing and Minting Company, with some currency also produced in overseas printing companies which serve as vendors to the Nigerian government. Coins currently seen as legal tender include the 50 kobos, 1 naira, and 2 nairas coins circulated since 2007.
Banknotes include the 50 kobos note, and the 1, 5, 10, 20, 50, 100, 200, 500, 1000 nairas notes. In 2014, the central bank released a commemorative note celebrating the nation's independence. This commemorative note has a quick-response code (QRC) that when scanned takes the user to a website about Nigeria's history.