Nigeria’s move from pounds, shillings, and pence to naira and kobo stands as one of the most important economic transitions in the country’s modern history. Yet it is often remembered loosely, reduced to a vague period rather than a clear sequence of events. The real story is not a blur of years but a structured national shift, guided by law, careful timing, and a controlled changeover that touched every household, market stall, and salary slip.
This transition mattered because money is not just currency, it is trust. How a country changes its money reveals how it manages stability, planning, and public confidence.
What Nigeria used before the naira
Before the naira, Nigeria operated under a currency structure based on pounds, shillings, and pence. This system reflected Britain’s older monetary tradition and shaped commercial life across colonial and early post independence Nigeria.
The Central Bank of Nigeria began issuing Nigerian currency banknotes from 1 July 1959. Despite this national control of issuance, the unit structure Nigerians used in pricing, accounting, and daily trade remained pound based until the decimal system was introduced.
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The law that created the naira and kobo
The formal break from the old system came under the Federal Military Government led by General Yakubu Gowon. The legal foundation for the change was the Decimal Currency Act, 1971 No. 21.
The Act established the naira as Nigeria’s unit of currency and defined the kobo as its subdivision, setting one naira equal to one hundred kobo. This marked Nigeria’s adoption of a decimal system designed to simplify counting and pricing.
The law also set the conversion basis for the transition, stating that one Nigerian pound would be equivalent to two naira. This rule allowed existing prices, wages, contracts, and obligations to be translated into the new currency without legal uncertainty.
Beyond definitions, the Act provided for the supervision of the changeover. This reflected an understanding that currency reform involves planning, coordination, and public adjustment, not just the printing of new notes.
Why 1971 and 1972 are often mentioned
Many people refer to “1971 to 1972” because the Act’s commencement was staggered. Certain sections of the law came into effect on 6 July 1971, while the remaining provisions commenced on 3 July 1972.
These dates marked the activation of parts of the legal framework, allowing institutions to prepare and systems to adjust. However, they did not mark the point at which the naira became the currency Nigerians used daily as the major unit.
The day the naira entered circulation
The defining public moment came on 1 January 1973. On that day, Nigeria changed to a decimal currency in practical terms. The pound ceased to exist as the major unit, and the naira, equivalent to ten shillings, became the country’s principal unit of money, with the kobo as the minor unit.
From that point, salaries, prices, and transactions were anchored in naira and kobo. This was the moment the new system moved from law and preparation into everyday reality.
What Nigerians first saw, notes and coins in circulation
When the naira and kobo entered circulation, they appeared as a full range of denominations designed for daily use.
Banknotes included ₦10, ₦5, ₦1, and 50 kobo. Coins included 20 kobo, 10 kobo, 5 kobo, 1 kobo, and half kobo.
These denominations reflected the practical goals of decimalisation. The new system simplified money arithmetic, made pricing clearer, and aligned Nigeria with a base ten structure that was easier for schools, traders, and accounting systems.
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How the old currency was withdrawn
The transition did not render the old currency worthless overnight. Instead, a structured phase out was put in place to allow Nigerians time to exchange and adapt.
A subsidiary instrument, the Decimal Currency Exchange Notice dated 30 December 1972, specified how long the old currency would remain valid. Under this notice, notes remained legal tender up to and including 14 February 1973, while coins remained legal tender up to and including 30 September 1973. After these dates, the old currency ceased to be legal tender.
This approach reduced disruption and protected ordinary Nigerians from sudden loss during the transition.
The timeline Nigerians should remember
Taken together, the sequence is clear. The Decimal Currency Act was enacted in 1971, creating the naira and kobo and setting the conversion rule. Parts of the law commenced in 1971 and 1972, preparing institutions and systems. The naira entered circulation as the major unit on 1 January 1973. The old currency remained valid for a defined period before being fully withdrawn.
This orderly progression explains why the change succeeded without chaos and why the naira quickly became part of everyday Nigerian life.
Author’s Note
Nigeria’s shift to the naira was not a single dramatic announcement but a carefully managed national process, beginning with law, moving through preparation, reaching the public on 1 January 1973, and ending with a measured withdrawal of the old money. Remembered this way, the story reflects a moment when policy, planning, and public trust aligned to reshape how Nigerians earned, saved, and spent.
References
Central Bank of Nigeria, History of Nigerian Currency.
Central Bank of Nigeria, 1973 Currency Issue, Change to Decimal Currency.
Laws of the Federation of Nigeria, Decimal Currency Act, 1971 No. 21.
Laws of the Federation of Nigeria, Decimal Currency Exchange Notice, 30 December 1972.
Encyclopaedia Britannica, Naira, monetary unit of Nigeria, introduced in 1973.
