Effect of Nigeria’s Recent Currency Redesign Policy on Small-scale Businesses Operation in Abakaliki Metropolis
Abstract
This quantitative study employed a survey research design to investigate the impact of the recent currency redesign on small-scale businesses in Abakaliki Metropolis. A structured questionnaire was meticulously designed, drawing on relevant literature and pre-tested for clarity and relevance. The study targeted a sample of 120 respondents, encompassing small-scale businesses representing various sectors to ensure a diverse and representative dataset. Data collection was executed using a primary source – the structured questionnaire – and prioritized closed-ended questions to facilitate quantitative analysis. The Statistical Package for Social Sciences (SPSS) version 27 was utilized for data presentation and analysis. The adoption of SPSS27 ensured robust statistical analysis, encompassing descriptive statistics, inferential statistics, and correlation analyses. The hypotheses formulated to test the impact of the currency redesign on transaction processes, consumer spending patterns, and pricing strategies were subjected to a one-sample t-test. An assumed mean of 0 and a critical table value of 2.92 guided the analysis. The findings indicated significant positive impacts on transaction processes, nuanced changes in consumer spending patterns, and noteworthy adjustments in pricing strategies among small-scale businesses in Abakaliki Metropolis. In conclusion, the study provides nuanced insights into the multifaceted effects of currency redesign on small-scale businesses. The adoption of a quantitative survey research design, the use of SPSS27 for data analysis, and the application of a one-sample t-test to test hypotheses added methodological rigour to the investigation. The findings challenge existing assumptions, contributing to a more nuanced understanding of the microeconomic responses to macroeconomic policy changes. The study recommends targeted interventions to address identified challenges in transaction processes and consumer spending patterns. These recommendations, based on robust statistical evidence, offer valuable guidance to policymakers and small-scale businesses navigating the complexities of currency redesigns.
CHAPTER ONE
INTRODUCTION
Background to the Study
As a nation at the forefront of economic development in Africa, Nigeria has continually pursued policies to foster growth and stability. A recent and impactful policy shift is the currency redesign, implemented by the government with the primary objective of enhancing security features and combating counterfeiting (CBN, 2020). This initiative, while essential for the nation’s economic integrity, has ushered in a new economic landscape for small-scale businesses in Abakaliki Metropolis. Understanding the intricate implications of this policy on these enterprises is imperative for assessing its broader impact on the local economy.
The currency redesign, as outlined by the Central Bank of Nigeria (CBN) in their press release on September 29, 2020, titled “President Jonathan Launches N50 Anniversary Note,” represents a strategic move in response to the evolving challenges of counterfeiting faced by the Nigerian economy (CBN, 2020). In the wake of this redesign, small-scale businesses in Abakaliki Metropolis, integral to the local economic framework, find themselves grappling with the intricacies of adapting to the new currency dynamics.
To comprehend the depth of the impact of the currency redesign on small-scale businesses, it is essential to delve into the historical context provided by Abubakar’s PhD thesis, “A History of Modern Currency in Former Sokoto Province” (2016). This historical lens offers insights into the evolution of Nigeria’s currency system, setting the stage for understanding the historical trajectory that has led to the current policy changes.
Abubakar and Wuam’s book, “Nigeria’s Apex Bank: The Central Bank of Nigeria (CBN) and its Major Role in the Nigerian Economy since 1958” (2021), further underscores the significance of the CBN in shaping Nigeria’s economic policies. This source provides valuable context for understanding the role of the CBN and the broader economic landscape leading up to the implementation of the currency redesign.
The small-scale businesses in Abakaliki Metropolis, ranging from local markets to family-owned enterprises, operate within the fabric of the local economy. Their significance cannot be overstated, contributing to employment, economic growth, and community development. As such, any shift in economic policies, especially those related to currency, directly influences their operations.
Statement of Problem
In the wake of Nigeria’s recent currency redesign policy, small-scale businesses in Abakaliki Metropolis face a myriad of challenges that warrant thorough investigation. The currency redesign, aimed at enhancing security features and curbing counterfeiting (CBN, 2020), has inadvertently given rise to a complex set of problems for these enterprises.
Firstly, the redesign has led to disruptions in transaction processes for small-scale businesses, as highlighted in the CBN press release of September 29, 2020, which introduced the new N50 Anniversary Note (CBN, 2020). The adjustment to the physical currency and its security features may have introduced complications in the day-to-day operations of these businesses, impacting the efficiency and fluidity of transaction processes.
Secondly, changes in consumer spending patterns have emerged as a pressing issue for small-scale businesses. The historical context provided by Abubakar’s PhD thesis on the history of currency in Sokoto Province (2016) emphasizes the importance of understanding how shifts in currency dynamics can influence consumer behaviour. It is imperative to investigate whether consumers in Abakaliki Metropolis have altered their spending habits in response to the redesigned currency, potentially affecting the revenue and sustainability of small-scale enterprises.
Additionally, the need for small-scale businesses to adjust their pricing strategies in response to the currency redesign poses a significant challenge. References such as “CBN (2022) Issuance of New Naira Banknotes” suggest that businesses may need to recalibrate their pricing models to align with the new economic landscape (CBN, 2022). This raises questions about the extent of adjustments these businesses make, the factors influencing their pricing decisions, and the potential consequences on profitability.
In essence, the statement of the problem underscores the multifaceted challenges faced by small-scale businesses in Abakaliki Metropolis as they navigate the repercussions of the currency redesign. The study aims to unravel these complexities, providing valuable insights for policymakers, business owners, and the academic community alike.
Objectives of the Study
The study sought to achieve the following objectives:
- To assess the impact of the recent currency redesign on transaction processes in small-scale businesses in Abakaliki Metropolis.
- To examine changes in consumer spending patterns following the currency redesign policy in the study area.
- To analyse the adjustments in pricing strategies adopted by small-scale businesses in response to the currency redesign.
Research Questions
To address the objectives of the study, the following research questions were formulated:
- How has the recent currency redesign affected transaction processes in small-scale businesses in Abakaliki Metropolis?
- What changes have occurred in consumer spending patterns in the study area since the implementation of the currency redesign policy?
- How have small-scale businesses adjusted their pricing strategies in response to the currency redesign?
Research Hypotheses
The study tested the following hypotheses:
Null Hypotheses(H0):
- There is no significant impact of the recent currency redesign on transaction processes in small-scale businesses in Abakaliki Metropolis.
- Consumer spending patterns in the study area have not significantly changed following the currency redesign policy.
- Small-scale businesses have not made significant adjustments in their pricing strategies in response to the currency redesign.
Alternative Hypotheses(H1):
- There is a significant impact of the recent currency redesign on transaction processes in small-scale businesses in the Abakaliki Metropolis.
- Consumer spending patterns in the study area have significantly changed following the currency redesign policy.
- Small-scale businesses have made significant adjustments in their pricing strategies in response to the currency redesign.
Significance of the Study
A comprehensive understanding of the impact of the currency redesign on small-scale businesses in Abakaliki Metropolis is imperative due to its profound implications for various stakeholders. Policymakers, armed with insights from this study, can refine existing policies and implement targeted interventions that specifically address the challenges faced by small-scale enterprises. By tailoring interventions to the nuanced effects of the currency redesign, policymakers can foster an environment conducive to the growth and resilience of these businesses.
For business owners in Abakaliki Metropolis, the study provides strategic information that is instrumental in adapting their operations to the evolving economic landscape. Understanding how the currency redesign influences transaction processes, consumer spending patterns, and pricing strategies equips business owners with the knowledge needed to make informed decisions. This strategic information becomes a valuable tool for navigating the complexities introduced by the currency redesign, enabling businesses to not only survive but thrive in the transformed economic environment.
Furthermore, the study contributes significantly to the academic discourse surrounding the impact of macroeconomic policies on micro-level economic entities. By delving into the specific context of Abakaliki Metropolis, the research augments the broader understanding of how macroeconomic decisions reverberate through local economies, particularly in the context of small-scale businesses. This academic contribution enriches the body of knowledge on the intricate interplay between macroeconomic policies and the microcosm of local business operations, providing valuable insights for researchers, economists, and policymakers alike. In essence, the study serves as a bridge between theoretical understanding and practical implications, fostering a more nuanced comprehension of the intricate relationship between macroeconomic policies and the resilience of small-scale businesses in Abakaliki Metropolis.
Scope of the Study
The study focused on small-scale businesses within Abakaliki Metropolis, considering their unique characteristics and contributions to the local economy. The timeframe of the investigation covered the period immediately following the implementation of the currency redesign policy. Data collection and analysis were confined to this specific context to provide a detailed understanding of the effects on small-scale businesses.
Operational Definition of Terms
To enhance clarity and precision, the following terms were operationally defined:
Currency Redesign: Refers to the recent policy implemented by the Nigerian government to introduce new currency notes with enhanced security features.
Small-scale Businesses: For the purpose of this study, small-scale businesses are defined as enterprises with a limited number of employees and relatively low annual turnover.
Transaction Processes: Encompasses all the activities involved in the buying and selling of goods and services, including payment methods and related procedures.
Consumer Spending Patterns: Describes the habits and trends observed in the expenditure of individuals and households in Abakaliki Metropolis.
Pricing Strategies: Refers to the approaches adopted by small-scale businesses to set the prices of their products or services, taking into account factors such as production costs and market demand.
Impact: The overall effect or influence of the currency redesign policy on the various aspects of small-scale businesses in the study area.
Policy Implementation Period: The timeframe during which the currency redesign policy was actively enforced and its effects started to manifest in the local economy.
Local Economy: Refers to the economic activities and transactions that occur within the geographical boundaries of Abakaliki Metropolis.
References
- Olabimtan, B. (2023, March 3). Old N200, N500, N1000 Remain Legal Tender Till Dec 31, Says Supreme Court”. Premium Times.
- Peter, D.O (2023). Currency Redesign: what implication does it have for socio-economic development in Nigeria? Association of African Development Finance Institutions; https://adfi-ci.org/currency-redesign-what-implicationdoes-it-have-for-socio-economic-development-in-nigeria/
- Robson, C. (2020). Real World Research (2nd ed.). Oxford: Blackwell.
- Tashakkori, A., & Teddlie, C. (Eds.). (2017). Handbook of Mixed Methods in Social and Behavioral Research. Thousand Oaks: Sage.
- The Punch (2023). Inflation soars to 21.82% amid naira redesign. Accessed May 14th, 2020, from: https://punchng.com/breaking-nigeria-inflation-rises-to-21-91/
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