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It is a sound monetary policy to redesign the naira in order to reduce inflation, stop naira counterfeiting, and manage the amount of money in circulation. This study’s sole objective is to investigate the impact of monetary policy and the Naira’s redesign on the Nigerian economy. The World Bank publications from 1970 to 2021 were the source of the secondary data. The regression model shows a substantial correlation between GDP and monetary policy even after accounting for inflation.

The model also shows that the GDP of Nigeria is positively and significantly impacted by the exchange rate and interest rate factors, but negatively and significantly impacted by the inflation rate coefficient. The results of the unit root test, which was also applied, show that all of the variables are ordered-one integrated. The integration study shows a long-term relationship between the GDP, exchange rate, interest rate, and inflation. This proves categorically that the Nigerian economy benefits greatly from sound monetary policy when it is effectively implemented by the federal government through the central bank of Nigeria.

This proves categorically that the Nigerian economy benefits greatly from sound monetary policy when it is effectively implemented by the federal government through the central bank of Nigeria. The government should occasionally strictly implement the Naira redesign decision through the Nigerian apex bank to prevent Naira note counterfeiting, remove about 80% of Naira currency outside of commercial banks, and also to mitigate the inflation rate that has essentially driven Nigeria into recession. This will benefit the economy of Nigeria.


Keywords: CBN, monetary policy, enaira, economic development, naira redesign.


Chapter One


Monetary authorities have been adopting numerous techniques, such as the redesign of the Naira, to reduce inflation and stabilise the economy since the COVID-19 pandemic affected the world economy, especially Nigeria’s economic growth (Muhammed and Abdulmajeed, n.d). The central bank of Nigeria is charged with managing inflation and preventing the counterfeiting of naira notes as the highest federal government bank in the country. In order to eliminate corrupt money from the system, manage the amount of cash in circulation to reduce inflation, maintain a strong security system by preventing voting fraud and kidnapping, and ensure a successful cashless economy that reduces the misuse of Naira notes and causes the Naira to appreciate over time, only the central bank of Nigeria has the authority to print and redesign the Naira (Olujobi, 2022). The governor of Nigeria’s central bank recently declared that the naira would be redesigned with a specific focus on removing black market funds from the system, decreasing crime, and lowering inflation (Analytical, 2022).

However, the redesign of the Naira is not something that has never been done before. Other countries have also altered the appearance of their currency, including the USA, the UK, and others. the redesign of the N5, N10, N20, and N50 notes took place in 2007, while the N1000 note was released in 2005. However, with the consent of the federal government, the N200, N500, and N1000 notes will be redesigned in 2022 (Analytical, 2022). Although the public’s opinions on the timing of the Naira redesign have varied in light of the unusually high Naira to dollar exchange rate brought on by the balance of payments deficit, market fluctuations, and high inflation, which in turn caused a steady rise in unemployment as many businesses are battling to survive (Orie and Orie, 2020)

The Nigerian central bank is in charge of overseeing monetary policy, which includes the redesign of the Naira, in order to control inflation, money hoarding, and counterfeiting, this study will considerably contribute to the advancement of information in a brand-new field of study by analysing the repercussions of the Naira redesign, a part of monetary policy in Nigeria’s economy. The redesign of the naira is a smart monetary plan that is proxied by significant indicators like the interest rate and exchange rate, even though the GDP will act as a proxy for Nigeria’s economic growth. Therefore, the primary objective of this study is to assess the impact of monetary policy and the redesign of the Naira on Nigeria’s economic growth.

Both real and perceived effects of the new Naira note redesign policy are present. The perceived effects rely on the perceived worth, the legitimacy of the currency, and the ease with which individuals can handle and identify the notes. In terms of its practical effects, the policy can have a bigger impact on public perception, security measures, and effective public awareness campaigns (Olujobi, 2022)

Overall, the strategy has beneficial and negative consequences on society and the nation’s economy that are mutually reinforcing. It would also increase the currency’s status as a sign of confidence, stability, and prosperity. The advantageous effects include:

  1. Greater Security: The latest security features, such holograms and watermarks, on the new Nigerian Naira notes make it more difficult for counterfeiters to create fake money. As a result, there is now more confidence in the money, and fraud and corruption are less common.
  2. Better Aesthetics: The Nigerian Naira note’s new design features eye-catching colours and pictures of significant individuals from the nation’s past. This has enhanced the currency’s overall appearance and feel and increased consumer interest in it.
  3. Greater Understanding: The redesign of the Nigerian Naira banknote has raised people’s awareness of the value of money and its contribution to the economy. As numerous images on the new notes feature significant personalities from Nigeria’s past, it has also increased awareness of the country’s history and cultural heritage.
  4. Economic Growth: The redesign of the Nigerian Naira note has aided in economic growth by raising consumer confidence in the currency, lowering the incidence of fraud and corruption, and enhancing the money’s overall appearance and feel. This has aided in boosting economic expansion and activity.

In contrast, the revised currency could have these unfavourable effects:

  1. Business Transaction Disruption: A currency redesign may cause problems with business transactions and make it more challenging for retailers to receive payments. Confusion and ambiguity may result from the rapid change in currency design, especially for individuals who are unfamiliar with the new form.
  2. Increase in Counterfeit Activity: Because the public may not be as familiar with the new design, the danger of counterfeit activity may increase as a result of currency redesign. A new currency design can give counterfeiters a chance to create phoney notes by taking advantage of the public’s unfamiliarity.
  3. Increasing Costs of Printing and Production: The price of printing and creating new banknotes might be high, and this price tag may be passed on to consumers. This could cause the economy to suffer and raise inflation.
  4. Travellers’ inconvenience: People who are unfamiliar with the new design of currency may find it difficult to use it. This may make transactions confusing and cause problems with currency exchange.
  5. Decline in Consumer Confidence: The abrupt modification of currency design may lower consumer assurance in the economy and result in a decline in demand for products and services. Reduced economic activity and a reduced GDP may result from this.

The redesign of currencies may have detrimental effects on the economy, including the interruption of commercial transactions, an increase in counterfeiting, higher printing and production costs, annoyance to travellers, and a decline in consumer trust (Pedro and Adesina-Uthman, n.d).

The Central Bank of Nigeria (CBN) will make the modification by January 31 of this year, marking the 16th redesign or revision of the naira since 1959, the suggested modification will have an impact on both the notes and the coins. According to this claim, central banks are permitted to redesign, produce, and issue new local legal currency every five to eight years in conformity with worldwide best practise. Since the initial redesign of the naira has been 20 years (Zoramawa et al., 2020).

However, none of the changes have sparked as much attention or interest as the naira’s projected redesign in 2023. In a statement made on October 26 by CBN Governor Godwin Emefiele, some naira denominations would have new designs. These are the N200, N500, and N1,000 notes. The management of the current series of banknotes and currency in circulation, particularly those not linked to Nigeria’s banking system, worried Emefiele, who claimed that the apex bank is concerned about the handling of the current bank note (Analytical, 2022)

The CBN is extremely concerned about the scale and complexity with which unscrupulous individuals have misused the naira, from hoarding to counterfeiting the notes. With statistics revealing that more than 85% of the cash in circulation is outside the vaults of our commercial banks, Emefiele said that people were hoarding banknotes. To be more precise, the CBN’s data as of the end of September 2022 showed that N2.73 trillion of the N3.23 trillion in money in circulation was allegedly kept by the general public outside the country’s commercial banks’ vaults (Muhammed and Abdulmajeed, n.d).

Many Nigerians are unaware that the CBN’s reputation has suffered as a result of the varied naira notes’ worn-out appearances, which has heightened dangers to the country’s financial stability. Because of the “growing ease and risk of counterfeiting revealed by various security reports,” the credibility of the naira and the CBN’s capacity to successfully control the currency were further threatened. Emefiele claims that “recent developments in printing technology and photographic technology have made counterfeiting relatively easier. The CBN has observed significantly greater counterfeiting rates recently, particularly at the higher denominations of N500 and N1,000 bills (Pedro and Adesina-Uthman, n.d).

In addition to the attacks on the naira, the CBN claimed that the current level of security in the nation, particularly cases of terrorism and kidnapping with perpetrators holding what Emefiele described as “large volume of money outside the banking system used as source of cash for ransom,” compelled it to redesign the naira (Analytical, 2022).

Untrustworthy people who hoard naira notes will be compelled to deposit them in banks or lose their ill-gotten gains if the naira is changed within the timeframe specified by the CBN and given the current regulations regarding cash deposits in banks.

The redesign of the Nigerian currency is a victory in the fight against counterfeit money and will significantly increase the country’s cash flow. The Central Bank of Nigeria (CBN) recently announced that its preparations to redesign the Naira were complete. The extraordinary decision was made, according to the CBN Governor, in large part due to money hoarding, inflation, and counterfeiting. Additionally, the Naira lacks the necessary security because it is simpler to counterfeit the N500 and N1000 denominations (Analytical, 2022).

Experts in policy, including economists, lawyers, and others, have been debating this subject in depth. Many of them believe that this policy move is merely a diversion from the serious economic difficulties that are currently roiling the country and offers no real economic benefits to the populace. Before the National Assembly, the Minister of Finance disavowed the policy and denounced it as having no financial or monetary worth. However, the President has reiterated his support for the strategy and its advantages as a means of reining in inflation and battling corruption. Given its costs and advantages, the question is whether this strategy is appropriate at this moment.

Monetary policy is governed by the CBN. It is the classic example of a regulatory body. The standard for making regulatory determinations, such as the one it is putting forth regarding the redesign of the currency, is that the regulator can only take action if the advantages of the suggested course of action outweigh the disadvantages. In addition to financial and commercial costs and benefits, a thorough cost-benefit analysis would also consider social and political costs and benefits (Muhammed and Abdulmajeed, n.d).

We should be aware that money is very important to a nation’s economy. It decides factors like general price levels, total national revenue, production and productivity, levels of employment for labour and capital, and exchange rates. and the payment balance

It is generally recognised that redesigning money could reduce counterfeiting, particularly in cases where the security of the current design can be readily gotten through. The redesign and printing of new currency will require billions of Naira in public monies, which is another fact. To support this design and printing of the new Naira, CBN should provide verifiable figures on the percentage of counterfeit Nairas (Orie and Orie, 2020).

According to the CBN’s most recent report, the 2020 Currency Report, 67,265 counterfeit notes totaling N56.83 million in nominal value were seized in 2020, representing a 20.80% decline in volume and 12.18% decrease in value compared to 84,934 pieces valued at N64.71 million in 2019. 100 is the global average for counterfeits per million. In 2020, there were 13 pieces of counterfeit currency for every million banknotes in circulation, down from 20 pieces per million in 2019. This demonstrates that the problem of money fraud is not as pervasive as would require a redesign of the currency (Analytical, 2022).

The CBN asserts that hoarding is the reason it is also revamping the Naira. Given that the Naira-Dollar devaluation is currently so high, CBN must utilise fake valuation, this claim should be thoroughly investigated. At least three devaluations of the naira occurred between 2021 and 2022, and it appears that there will be at least one more. This devaluation, along with rising inflation, will decrease the naira’s purchasing power. The CBN’s argument that a currency with a sharply declining value is being extensively hoarded defies economic logic (Zoramawa et al., 2020).

The political class has the ability to accumulate such vast sums and would have had the ability to convert it to dollars. The CBN Governor’s contention that a redesign of the currency will hinder ransom payment is further undermined by the conversion argument. Naira redesign alone won’t stop the rise in inflation in this nation, especially when this approach doesn’t recognise the real worth of the Naira. It might even cause inflation to rise since persons who had large sums of illegally obtained Naira could use them to buy expensive goods or engage in currency exchanges that would raise the. Based on this context, the researcher wishes to look into how the redesign of the naira has affected Nigeria’s economy.

Figure 1: Naira note redesign

naira note design

Source: Author


Problem Statement

The Central Bank of Nigeria believes that the redesign of the currency will further our attempts to create a cashless economy because of greater eNaira manufacturing. This will increase the banking system’s ability to control foreign currency and boost the efficiency of monetary policy. Additionally, Nigeria depends significantly on imports, which gradually devalues the naira in relation to other currencies. In addition, one of the fundamental responsibilities of central banks is to ensure price and exchange rate stability. Nigeria, on the other hand, hasn’t fared well in this regard. Reviewing the Central Bank of Nigeria’s initiative to restructure its currency critically is important once more.

Redesigning the naira notes was viewed as a way for the government to reclaim its control over the currency. To put it another way, people may start using foreign currencies if they lose faith in the local currency. Due to its timing and brief transition time, the World Bank has warned that the recently redesigned naira, which entered circulation last week, may have a detrimental impact on economic activity, particularly for poor Nigerians. In light of this, the study aims to determine how the redesign of the naira will affect economic growth.


Research Objectives

The study’s objectives is to discover how the redesign of the naira has affected Nigeria’s economic growth. The particular goals are;

  1. To analyse how the redesign of the naira notes will affect Nigeria’s economic growth
  2. To evaluate how redesigning the naira note affects Nigeria’s inflation rate.
  3. To determine how the cost of redesigning the naira will affect Nigeria’s economic growth.


Research Hypothesis


To direct the investigation, the following research hypotheses have been developed;


  • H0: The redesign of the naira has no discernible effect on Nigeria’s economic growth.
  • H1: The redesign of the naira will have a substantial impact on Nigeria’s economic growth.
  • H0: Redesigning has no impact on Nigeria’s inflation rate.
  • H2: Redesigning has an impact on Nigeria’s inflation rate.
  • H0: The redesign of the naira will not significantly affect Nigeria’s economic growth.
  • H3: The redesign of the naira will have a substantial impact on Nigeria’s economic growth.


Significance of Study

Students, professors, the government of Nigeria, and policymakers will all benefit from the study’s conclusions. Nigerians will learn from the research about the benefits and drawbacks of revamping naira notes. The findings will take into account how it affects Nigeria’s inflation. The work will also be used as a resource by other scholars who pursue relevant studies.


Scope of Study

The study’s focus will be on how the redesign of the naira will affect Nigeria’s economic growth. The study’s data would be obtained from the Nigerian national bank.


Definition of Terms


Nigeria: the most populous black nation in the world located at the western part of Africa

Naira: currency spent in Nigeria

Enaira: also known as electronic naira is the Nigerian currency in the crypto market

Currency redesign: The main goal of currency redesign is to achieve specific goals such increasing banknote security, minimising counterfeiting, protecting the nation’s common heritage, managing the amount of money in circulation, and lowering overall currency management costs.

Central Bank of Nigeria (CBN): the organisation the regulates the financial sector of the economy

Economic development: Programs, policies, and activities that promote economic development aim to raise a community’s standard of living and economic health.


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