Posted by Chester Morton / Friday, 13 January 2017 / No comments
The historical development of money in Nigeria
HISTORICAL DEVELOPMENT OF MONEY
Money can be defined as “any commodity which is generally acceptable in exchange for goods and services.” It has three dimensional meanings. The first is that it is a medium of exchange. The second is that it is a unit of account and the third is that it is a store of value. For the ordinary man in the street, because he uses money for the exchange of goods and services is seen as a medium of exchange.
DEVELOPMENT OF MONEY IN NIGERIA
In the beginning, goods were exchanged for other goods. This means that if someone wants oranges, he or she needed to exchange what he or she had for the orange. For instance, the person has avocado but wants oranges; so he looks for someone who has oranges and exchanges it. This system was called the barter system.
There were difficulties with the operation of this barter system. One of these problems is that if someone had avocados and wanted oranges, that person must look for another person who has the oranges he or she is looking for but who also wants avocado in return. Apart from that, there was a problem of determining how many avocados must be exchanged for how many oranges. The system was therefore not as smooth as was needed.
The next stage of the development of money is the stage of commodity. This kind of money was valuable and wanted by many people. It was also durable and portable. It could also be easily stored. An example of this commodity is maize because it was in great demand and was useful on its own. At other times, commodities like tobacco, salt etc were used as money.
After this, precious metals were introduced and used. They were referred to as metallic money. Some examples of precious metals which were used as money were gold and silver. For one thing, they were valuable. They could also be divisible into smaller sizes and weighed so as to assign a value to each or weight.
One of the earliest use of coins as money was in Ancient India around the 6th century BC. Later, the Greeks and the Romans used it.
Paper currency, on the other hand, was first introduced in China in the 11th century. Later, it was introduced in Europe by the renowned explorer, Marco Polo in the 13th century. The paper currency later spread to other parts of the world.
In Nigeria, cowry shells were widely used as a medium of exchange but in 1907, the British West African pound was introduced. It was part of the introduction of the British West African pound in the whole of British West Africa. This was in use until 1958 when the Nigerian pound was introduced.
The government Nigeria introduced the Nigerian currency called naira on 1st January 1973. This new currency replaced the West African British pound. Nigeria thus became the last English speaking West African country to abandon the West African monetary system. The naira has since been used as the medium of exchange in Nigeria.