The Gap

How counterfeit money impacts Nigeria’s economy

How counterfeit money impacts Nigeria's economy

Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), announced on 26 October that the N200, N500 and N1,000 denomination notes would be redesigned partly because of the high rate of counterfeit money. “In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes,” the CBN Governor said.

The existence of counterfeit money has consequences on the monetary policy of every country. Economists posit that counterfeit currency triggers inflation, leading to other unfavourable indices and occurrences for a country’s economy. The involvement of highly organised criminals in currency counterfeiting further complicates the job of law enforcement agencies to nip this act in the bud.

“To counterfeit is death”, said Benjamin Franklin, one of America’s Founding Fathers and greatest statesmen. Yet, many people have continued to indulge in this act till today. Therefore, what is counterfeit money? Why do people counterfeit money such as the Naira? More importantly, how does one spot counterfeit money and act after coming into contact with such currency?

Meaning of counterfeit money

Counterfeit money refers to the production of false currency for pecuniary gain. Counterfeiters manufacture this false money to resemble an original currency, but in reality, it is an unauthorised imitation of the legal tender.

It is deliberately manufactured in an attempt to defraud the recipient. The production of such currency is illegal as the appropriate monetary authorities of a country hardly sanction it. In plain terms, it is money that is not genuine but has been made to look exactly like a genuine currency to deceive people.

Being a form of fraud and forgery, the production of counterfeit money is instigated by and directly funds the activities of organised crime networks. The motive of the criminals is to overflood the economy with fake banknotes so that the real value of the money plummets. Other motives include forcing an artificial increase in the money supply or a decrease in the acceptability of paper money.

The production of counterfeit money is an age-long practice. This illicit activity can be traced back to the production of coins in the Lydia region (now modern Turkey) around 600 BCE. Counterfeiters of this period shaved the edges of a coin, and the metals collected through this method, known as clipping, were used to produce counterfeit coins. As a result, Fourrées (an ancient type of counterfeit coin) circulated widely during this period in Lydia.

With the introduction of paper money in the 13th century, there has been significant counterfeiting of the various banknotes and coins issued by financial regulatory authorities. Some of the finest counterfeit banknotes are called “superdollars” because of their high quality and imitation of the real US dollar, the world’s primary reserve currency.

However, it is also important to note that countries have used counterfeit money as a means of warfare. Evidence abounds of countries utilising this technique to undermine other countries deemed as their enemies during times of war, such as Great Britain during the American Revolutionary War to reduce the value of the Continental Dollar and Nazi Germany during World War II with the British pounds and American dollars.

The prevalence of counterfeit money has intensified globally due to computer and photocopy technology advances. Individuals.

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Counterfeit money in Nigeria

Counterfeit money in Nigeria

Counterfeit money production and usage in Nigeria precedes its independence, signifying that it has been happening since ancient times. The British Imperial coinage was counterfeited at a high rate, a situation that forced the colonial administration to be alarmed. Over 2,000 counterfeit coins were seized in the Old Oyo Province in 1937. Earlier in the 1920s, the colonial secretariat instructed all its district and province officers to work with the police to apprehend those who counterfeited the coins.

The recollection of counterfeiting history in Nigeria will not be complete without mentioning the 1937 panic. The circulation of forged money became rampant and began to impact the economy negatively as this fake currency was used for payments at local markets and official transactions such as payment of taxes and levies, licences and fines. Many persons were arrested across the country, but counterfeiters continued to thrive, and they perfected their illegal business.

Paper money had become more frequently used in Nigeria from the 1950s, and it was introduced partly to mitigate against counterfeiting. However, complaints arose shortly afterwards, with reports of the counterfeit notes “improving in design”, according to the Regional Treasurer based in Ibadan.

Although Nigeria decided to have its currency to signify that it is an independent nation, the introduction of the Naira as the country’s legal tender on 1 January 1973 meant that the currency, just like its counterparts worldwide, became prone to counterfeiting. Numerous reports have emerged over the years of law enforcement agents apprehending people whose business was to counterfeit the Naira.

For instance, the CBN announced in its 2019 yearly report that it seized 84,934 counterfeit banknotes in the stated year, with a nominal value of N64.7 million. In 2020, the apex bank confiscated 67,265 counterfeit banknotes with a nominal value of N56.8 million. This barefaced act has lingered for years despite enacting what is considered a stern regulation against counterfeiting in the CBN Act of 2007. Section 20 of the act stipulates “a term of imprisonment of not less than 5 (five) years” for any individual who falsifies, makes or counterfeits any bank note or coin issued by the apex bank, which is legal tender in Nigeria.

Interestingly, the Naira is not the only banknote that counterfeiters in Nigeria have specialised in falsifying. There are also numerous merchants circulating fake US Dollars in the country to unsuspecting Nigerians, particularly those who change currencies from third parties such as Bureau de change. Just recently, the Nigeria Security and Civil Defence Corps (NSCDC) arrested a notorious syndicate which deals in the printing, sales, and distribution of fake US Dollar notes in the country. According to the report, members of the syndicate were found to possess a fake $15,400 upon arrest.

Genuine and fake US Dollar
Genuine and fake US Dollar
Source: wikiHow

All these brazen acts of illegality have occurred due to factors such as the quick printing of high-quality counterfeit paper by skilled printers, who use the latest technology and laser or inkjet printing techniques or, in most cases, offset lithographic printing techniques.

There is no gainsaying that the implication of counterfeiting has been devastating to the Nigerian economy. The unauthorised artificial increase in the money supply has led to inflation. The prices of goods and services have continued to skyrocket over the years, with the country’s inflation rate surging to 21.09 per cent in October 2022, according to the National Bureau of Statistics (NBS). The inflation rate is a new 17-year high rate as it is a 0.32 per cent increase from 20.77 per cent recorded in September 2022.

Unsurprisingly, a large volume of fake banknotes in circulation currently is outside the banking system but are unknowingly used by some members of the populace for business transactions. As a result, individuals and companies who have fallen victim to fake money are not being reimbursed for counterfeits. This has led to individuals and companies losing purchasing power and ultimately affecting their businesses.

The existence of counterfeit notes also means that the apex bank is forced to expend a lot of resources which could be needed elsewhere on printing new notes with enhanced security features. The sum of N75,523.50 million was spent on printing the Naira in 2019, while N58,618.50 million was used for the same purpose in 2020. This was highlighted by Emefiele, the CBN Governor, who, when announcing the redesign of the Naira, stated, “In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.”

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How to spot counterfeit money

How to spot counterfeit money

If at any point in time, a reader suspects that the banknote given to him or her is not genuine, such a person can take the following steps to authenticate the note:

Check the watermark feature

The watermark is an essential security feature of all banknotes across the world, including the Naira. The watermark is a replica of the face on the bill. To determine if the note is genuine or fake, raise the banknote in the direction of light to view the watermark. It should only be visible when you hold the banknote up to the light. If the watermark is a face, it should be a direct replica of the face on the banknote.

Use your fingers to detect the banknote’s raised printing

The majority of the currencies in the world, including the Naira, have a feature known as raised printing. This feature can be detected when an individual carefully runs his or her fingernail down the note. Such a person should feel some vibration on his or her nail from the ridges of the raised printing.

The texture of the banknote

Banknotes are produced using a special paper, which is different from the regular paper that members of the public come in contact with daily. This special paper gives a distinctive appearance and feels to banknotes. The paper is a bit thick in texture but enables individuals to glide their hands over the note.

In the case of the Naira, the CBN introduced the use of polymer paper in 2007 and is being used for the N5, N10 and N20 denominations, respectively. The polymer substrate provides a different texture to the N100, N200, N500 and N1,000 notes, which are printed using the paper substrate, as it feels slick and slippery when held in the hand.

Portrait, lettering, denominational numeral and borders

The portrait, lettering and denominational numeral are placed on both the front and back of the banknotes, with some of them enclosed with border lines. These aforementioned features are embossed, meaning they are carved, moulded, or stamped as designs on the note and should, therefore, not peel from it.

Also, if there are blurry borders, printing, or text on the banknotes, there is a high degree that such a note is counterfeit. Genuine banknotes are made using die-cut printing plates that create impressively fine lines, a feat that counterfeiters can hardly replicate as they hardly have access to such a device. The colour of a counterfeit naira note is either faded or too coloured.

Once a banknote is raised in the direction of light and the border lines do not appear impeccably neat and detailed, such a note is suspect.

Presence of a security thread

The security thread is a thin embedded strip running from top to bottom on the face of a banknote. These threads are consciously placed on the banknote’s right or left. They are done with microprinting to provide an extra layer of security.

With regards to the Naira, the security thread is a silver line which appears to be broken, but when raised in the direction of light, it is a single, straight line. It has “CBN” in small lettering printed on the thread and is only visible when it is raised towards the direction of light. If these features are missing, that Naira banknote is counterfeit.

For the US Dollar, the following microprinted phrases appear on the following notes:

  • $5 bill: “USA FIVE”
  • $10 bill: “USA TEN”
  • $20 bill: “USA TWENTY”
  • $50 bill: “USA 50”
  • $100 bill: “USA 100”

Ultraviolet light

Ultraviolet light is a device used mainly by banks and big businesses which can afford it. Ultraviolet light technology is a distinct method to determine whether a banknote is counterfeit or not.

For the US Dollar, the security thread glows under ultraviolet light in the following colours

  • $5 bill glows blue
  • $10 bill glows orange
  • $20 bill glows green
  • $50 bill glows yellow
  • $100 bill glows red/pink

It is different for the Naira as the serial number, found on the left side, of all the banknotes (N5, N10, N50, N100, N200, N500 and 1,000) turns from black to green under ultraviolet light.


Observing the size of banknotes is important because it helps an individual to detect a fake currency note. Some counterfeiters are unable to replicate the exact size of a genuine currency note or coin due to their haphazard work.

The lower denominations ((₦5, ₦10, ₦20, and ₦50) are 151 x 78 millimetres in size, while the higher denominations (₦100, ₦200, ₦500 and ₦1000) are printed and are 151 X 78 mm in size.

Serial number

Examining the serial number of the various banknotes in circulation is pertinent. Fake notes often carry the same serial numbers.

As mentioned earlier, the serial number on each banknote is black but turns green under ultraviolet light for an original banknote.

What to do when you receive counterfeit money?

If an individual receives counterfeit money, activate the following steps:

  • Do not return it to the provider
  • Delay the provider, if possible (ensure that the person is not armed with any weapon; if it is the opposite, do not contest)
  • Get vivid details of the individual(s) involved, including facial description, vehicle plate number (if the counterfeiter drove a vehicle), phone number etc.
  • Report the situation to the police or other law enforcement agencies (In Nigeria, the EFCC, ICPC and NFIU) and submit the fake note as evidence
  • Limit the handling of the note. Carefully place it in a protective covering, such as an envelope

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Gabriel is a trained political scientist, and a qualified and versatile communications professional who has worked as a journalist and Public Relations executive. He has a knack for content creation and development and is a keen digital native interested in all things good.
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