Assessing the Impact of Naira Policy Redesign on Nigeria’s Economic Development

1Nwobodo, Chidalu Nkemjika, 2Uzoma, Friday Christopher and 3Ekoh, Livinus Akajife

1Department of Economics Enugu State University of Science and Technology Agbani.

2Department of Banking & Finance, Enugu State University of Science and Technology, Agbani, Nigeria

3Department of Educational Foundations, Nnamdi Azikiwe University, Awka, Nigeria


This research investigated the impact of the Naira Redesign Policy on Nigeria’s Economic Development by administering structured questionnaires to 800 participants across 3 Deposit Money Banks and 3 Tertiary institutions in the South East region of Nigeria. Of these, 160 respondents, representing 20%, either did not return or submitted incomplete questionnaires. Utilizing Cluster Mean Analysis based on Likert’s Five Point Scale, the study addressed its research inquiries. Additionally, it critically reviewed existing theoretical analyses related to the subject matter. The results indicate that the Naira redesign policy did not curtail illegal activities or corruption, stabilize exchange rates, facilitate easy access to production and investment loans, prevent vote buying or monitor campaign funding, lower interest rates, or increase financial inclusion while reducing the unbanked population. However, the policy did reveal currency holdings previously outside commercial bank vaults, aided security agencies in combating banditry and ransom incidents, but contributed to low savings and investment, resulting in citizen poverty. The study recommends a necessary redesign, production, and circulation of the Naira, aligning with globally accepted Central Banking standards. This call is particularly crucial considering the lack of such an exercise by the CBN for almost two decades. Moreover, this redesign process should occur concurrently with the withdrawal of the old currency.

Keywords: Naira Redesign, Likert’s Five Point, Cluster Mean Analysis, Economic Development.


It could be recalled that on October 26, 2022, Emefiele, governor Central Bank of Nigeria (CBN), announced the introduction of new redesigned naira notes to replace the current N200, N500 and N1000 notes in circulation with a deadline of 31th January, 2023 within which all old notes would be deposited in the banks [1]. He  hinge such action on fighting corruption, currency fraud, tackling growing menace of kidnapping for ransom and to address the problem of too much money in circulation. Other reasons adduced were to prevent counterfeiting, encourage a cashless economy and financial inclusivity in the country. [2] observes however that Nigeria had gone through this route in the past but never in the annals of the nation’s political history has such an exercise brought so much hardship, confusion, apprehension, rancor and despondency as was witnessed and experienced this time around.  Amongst the changes in the past, apart from redesign were in the area of inscription, from metal to paper type, color or artistic inclusion [3]. It could be remembered that in the year 1962 for instance, Nigeria had changed her currency by adding the inscription “Federal Republic of Nigeria” to replace the word “Federation of Nigeria” that was there hitherto but however retained the name “Pound” on the notes. In 1973, there was a total change in the nomenclature of the currency in the unit from “Pound and Shillings” to “Naira and Kobo”. Four years down the line in 1977, the military regime under General Olusegun Obasanjo brought into circulation a new 20 naira note denomination with the image and inscription of a late Nigeria military Head of State Multala Muhammad as the highest currency. Again, in 1979, Obasanjo, now as the Civilian President introduced three new denominations of bank notes: N1, N5, and N10 with artistic images reflecting the culture of the country. Not yet done, Obasanjo again brought into circulation N100, N200, N500 and N1000 denominations of banknotes in the years 1999, 2000, 2001, 2005 respectively to facilitate trade and expand the economy [3].  

Other changes in the naira were in the color. First was in April 1984, the reason adduced for the change was to arrest the currency trafficking that was said to be prevalent at the time [4]. The second change was in the year 2009 when N5, N10 and N20 in polymer notes were introduced and in 2010 when N50 polymer note was issued to celebrate Nigeria’s 50th independence anniversary. Again in 2014, N100 note denomination was redesigned to celebrate the 100th year of the amalgamation of the Northern and Southern protectorates. However, Central Bank of Nigeria, (CBN) under Buhari argues that the latest policy change became necessary to manage inflation, halt distortion in the financial policy and control money in circulation the volume of which at the inception of the administration in 2015 was said to have risen from N1.4 trillion to N3.23 trillion in 2022 and out of which only N500 billion was said to be within the commercial bank vaults. It went further to predict that the naira redesign policy would strengthen Nigerian macroeconomic parameters in the short to long term; reduce broad money supply and decelerate the velocity of money in the economy; collapse illegal activities and help stem corruption and acquisition of money through illegal ways; stabilize exchange rate; provide easy loans and lower interest rates. Also, that the policy will provide greater visibility and transparency of the financial actions translating to efficient enforcement of ant-money laundering legislations and minimize the influence of money politics; leading to free and fair democratic elections in 2023.  It went further to predict that the policy would lead to a successful retrieval of about N2.1 trillion (representing 80% of fund hitherto held outside the banking sector) and unavailable for economic activities. Other arguments adduced were that the policy coming close to the general elections might have positive effect on inflation and better adoption of digital payment; help Independent National Electoral Commission (INEC) monitor campaign funding and restrict incidences of vote buying which has become a menace to Nigeria’s electoral system; plug fiscal leakages; boost government revenues; aid economic empowerment of vulnerable Nigerians and benefit the country as a whole. It was also argued that it was to mitigate the hardships and place the economy on the side of growth and development that President Buhari approved the new redesign  naira notes policy to circulate alongside the old banknotes till 31st January 2023 when the old notes would cease to be legal tender. However, till date, the old note is yet to cease to be a legal tender while the new one has gone into oblivion [5].  

However, there were debates on the desirability of this policy now that the 2023 electoral activities were on hand. Those on the other side of the divide maintain that Nigeria had gone through this route before without much success, wondering how same treatment to an ailment will produce different results. For instance, [6] argues that the policy has caused banknote scarcity with associated hardship to millions of citizens. [3] argues that the back and forth in naira redesign policy has led to violent protests across several parts of the country; result to cash scarcity and increased fuel prices and led to a loss of about N20 trillion due largely to fuel subsidy removal which is an offshoot of naira redesign policy. Again that mining activity and agriculture, Nigeria main activities and sources of revenue were relegated to the back ground due largely to the policy and insecurity in the country. Also that Nigeria’s oil an important contributor to its economic success between 2001 and 2010 that contributed immensely to her becoming one of the countries with the highest GDP growth worldwide has declined largely to corruption associated to the policy. It was argued that it declined from3.11% in the first quarter of 2022 to 3.52% in the fourth quarter of 2022 [4]. Going further, [5] maintains that naira redesign policy even gave birth to disobedience to court orders; pitching states against the federal government; resulting to unimaginable angst and in wanton destruction of lives and properties of financial institutions.

All these coming a few days to the general elections they argue have obvious negative consequences on the standard of living of the citizens and on the polls. Unarguably, unemployment was a major contributing factors to poverty and was made possible by high cost of living, resulting to downward in the standard of living of the citizens. [6] summed it up by saying that “nearly two-thirds of Nigeria’s 200 million people now live on less than $2 a day”. While Poverty Index Survey (2022) has it that 63% of persons living within Nigeria (133 million people} are multi dimensionally poor.  The 1991 Human Development Index which is a summary measure of a country’s average achievements in three basic aspects of human development: health knowledge and standard of living places Nigeria in the 32nd position from bottom amongst 160 countries in terms of Human Development. In other words, Nigeria is ranked one of the poorest of 32 nations of the world [5]. Nigeria’s value by HDI remains unchanged with 0.535 while its life expectancy is placed 52.7 years in 2021. Her expected years of schooling is 10.1, and its income per capita hits $4.790 in 2021 (https:// business> news 8 sept 2022). Nigeria is also said to be a weak performer in terms of its knowledge infrastructure as it ranks 124th out of 154 countries in the Global knowledge index 2021 and 5th out of 27 countries with low human development (https:// knowledge 4>…PDF).  Knowledge in HDI measures the expected years of schooling for children of school entering age) and average years of schooling (for adults aged 25 and older). Supporting, Chukwu and Asheloge (2023)argues that the naira redesign policy as recently introduced has increased inflation following the scarcity of new notes; leading to banks rationing money to their customers even as Christmas festivities approach. Bureau of Statistics in its consumer price index shows that Nigeria’s inflation has hit 28.20% as at November 2023, the highest in the recent past while food inflation was at 32.84% within the same period.

Summary of Findings

Findings show that: the naira redesign policy did not collapse illegal activities and stemmed corruption; did not bring exchange rate stability in the economy; did not make available easy loans for production and investment; did not help to disrupt vote buying, monitor campaign funding; did not increase financial inclusion and the reduction of unbanked population; and did not increase visibility and transparency of the financial actions; did not bring down interest rate and inflation rate. The study however accept that the naira redesign policy  helped to unearth currency hitherto hoarded outside the vaults of commercial banks; supports the efforts of security agencies to combat banditry and ransom – taking; contributed to low savings and investment and also resulted to poverty of the citizens;


The study concludes that they is a need for the naira to periodically be redesigned, produced and circulate periodically in line with the approved global standard practices for Central Banks more so since CBN is yet to carry out such exercise for close to 20 years now. However, such important assignment should be carried out simultaneously as the old ones were being withdrawn.


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  2. Ogunnaike, O. (2020). “Impact of Exchange Rate Policies on Economic Growth in Nigeria.” Journal of Economics and Sustainable Development, 11(19), 77-85.
  3. Adediran, O. A., & Ogunmuyiwa, M. S. (2018). “Exchange Rate Volatility and Economic Growth in Nigeria.” Cogent Economics & Finance, 6(1), 1-16.
  4. Adebayo, S. B., & Adetoba, O. J. (2021). “The Effect of Exchange Rate Policy on Economic Growth in Nigeria.” Academic Journal of Economic Studies, 7(3), 97-108.
  5. Ajide, K. B., & Raheem, I. D. (2020). “Exchange Rate Variability and Economic Growth in Nigeria: A Bayesian Markov Switching Approach.” Cogent Economics & Finance, 8(1), 1-19.
  6. Akinlo, A. E., & Asongu, S. A. (2019). “Exchange Rate Volatility and Economic Growth: Do Credit Constraints Matter?” Journal of African Business, 20(3), 357-372.

CITE AS: Nwobodo, Chidalu Nkemjika, Uzoma, Friday Christopher and Ekoh, Livinus Akajife (2023). Assessing the Impact of Naira Policy Redesign on Nigeria’s Economic Development. NEWPORT INTERNATIONAL JOURNAL OF CURRENT RESEARCH IN HUMANITIES AND SOCIAL SCIENCES,3(3):27-34.