The New Naira Note Redesign And The Prospect Of Inclusive Economic Development In Nigeria

ABSTRACT

This paper investigates the impact of new naira note redesign on economic development in Nigeria. In order to fulfill this objective, this paper  reviewed the impacts of similar policy on the Nigeria economy over years by sampling techniques. The design shows that this research is simply the process of arising at a dependable solution to problem through the planned and systematic collection analysis and interpretation of data.  Sample size and sampling techniques is 124.  The strategies random sampling technique was used.  Method of data collection, the interview for collection of more facts and clarification (primary and first hand information).  The questionnaires were administered to the bank customers and to the bank staff and management through with a lot of difficulties.  Method of data analysis, for the purpose of this data analysis that follows in this part of the work, the following data analysis tools have been extensively use, we use simple percentage to analyse.  The finding showed that: (i) naira note redesign have greatly impact the economy of Nigeria.  Based on findings it was recommended among other the central bank should release certain policies in other to enable bank to dispense more monies to their customers.

TABLE OF CONTENTS

COVER PAGE

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWELDGEMENT

ABSTRACT

CHAPTER ONE

• INTRODUCTION
• Background of the project
• Statement of the problem
• Aim and objectives of the project
• Research questions
• Statement of hypothesis
• Justification of the study
• Delimitations of the study
• Limitations of the study
• Definition of terms

CHAPTER TWO

LITERATURE REVIEW

• REVIEW OF THE STUDY
• CONCEPTUAL REVIEW OF THE STUDY

2.2.1  Importance Of Naira Redesign

2.3     THEORITICAL REVIEW OF THE STUDY

2.3.1  Currency redesign and economic development

2.3.2  The cashless policy

2.3.3  Benefits of Cashless Policy to the economy

2.3.4  Economic and Legal Issues on the Redesign of the Naira

2.3.5  Costs and Benefits Analysis of the Policy

2.3.6 Review of Related Studies

2.4      EMPIRICAL REVIEW OF THE STUDY

2.4.1  Effects of adopting the policy of currency redesign on the Nigerian economy overtime

2.4.2 The Power of CBN to Make this Monetary Policy Decision

2.4.3  Purpose and Intent of the Redesign

2.4.4 Long and Short Term Impact on the Economy

2.4.5  Nigerian law on currency redesign and redistribution

2.4.6  Global Best Practices on currency redesign

2.4.7  Nigeria’s 2022 currency redesign scheme and global best practices

CHAPTER THREE

RESEARCH METHODS

• Research Design
• Area of Study
• Population on the Study
• Sample Size and Sampling techniques
• Instrument for Data Collection
• Method of Data Collection
• Validation and Reliability of the Instrument
• Method of Data Analysis

CHAPTER FOUR

4.0      PRESENTATION AND ANALYSIS OF DATA

CHAPTER FIVE

• Summary
• Conclusion
• Recommendation

CHAPTER ONE

1.0                                                               INTRODUCTION

• BACKGROUND TO THE STUDY

The currency of every nation has a tremendous effect on the economy and remains one of those distinguishing features of a nation. The effective management and distribution, trade, as well as consumption of goods and services depend largely on the effectiveness of a nation’s currency. According to Alhc (2009), in a monetized economy as it is the case with Nigeria; money is a viable tool for economic transformation, growth and progress. The optimum distribution of economic resources and the efficient functioning of a modern economic system would not be possible without the monetary apparatus which, by and large enables the government to provide the governed with basic amenities and perform other related functions for the benefit of the country. Central Bank of Nigeria CBN, asserts that during the pre-colonial era, different cultures used a variety of items as means of exchange. These included cowries, manilas, beads, bottles, and salt amongst others. They (CBN), also notes that the first currency issue in Nigeria was undertaken sequel to the colonial ordinance of 1880 which introduced shillings and pence as the legal tender currency in west Africa. The units of coins, managed by Bank of England were one shilling, 1 penny 1/2, 1/2 penny and 1/10 penny and were distributed to a private bank, of British west Africa till 1912 (www. CBN. Gov.ng). In Akpabuyo community in cross River State, Nigeria, people pay for what they need with what they have, instead of using coins and banknotes. They say its part of their culture that they want to preserve. BBC News. To further buttress the above, Asobia (2021) opines that in Africa, items adopted as currencies were to a large extent influenced by ecological determinants. Cattle, grains and farming implement were adopted as currencies in North Africa while farming implements and the raw materials were more emphasized in the forest areas of west and central Africa. Obviously, Nigerians being a country in Africa was not left out of the olden day’s method of trading. No wonder, Nwankwo (2021) notes that Nigerians didn’t start using naira until 13 years after independence.

On January 1 st 1973, Nigeria started using its own currency. It was named after naira by Chief Obafemi Awolowo. Naira and kobo was rolled into the Nigerian economy with bank notes and coins. In 1973 also, we had ½ 1, 5, 10 and 25 kobo coins and 50 kobo, N5 and 10 bank notes. The half and one kobo were made with bronze and the higher denominations in cupro-nickel N1 is 100 kobo. In 1977, the N20 was introduced. In 1987, the 5 kobo and 10 kobo and coins removed from circulation and in 1991, the 50 kobo and N1 notes were changed to coins. In 1999, the 100 note was introduced in 2000 N200 was introduced. N500 was introduced in 2001 and N1000, the largest Nigerian in circulation was produced (www. Zikoko. com). The central bank of Nigeria CBN has in many occasions redesigned the naira notes to suit different situations. For example, on 30th September 2009, the redesigned N50, N10 and N5 bank notes were converted to polymer substrate following the successful performance of the N20 (Polymer) banknote. Also, as part of CBN’s contribution toward the celebration of the nations’ 50th anniversary of Nigeria independence and 100 years of its existence as a nation issued the N50 commemorative polymer banknote on 29th September 2010 and the N100 Commemorative banknote on 19th December, 2014 respectively. Recently the Governor of central bank of Nigeria, Godwin Emefiele on October 26, 2022 announced that new naira notes would be introduced to replace the current N200, N500 and N1000 naira notes. Emefiele said that the redesign will take effect from Thursday December 15 2022. He also said that existing notes would seize to be regarded as a legal tender by January 31st 2023 (Vanguardngr. com). On 15th November 2022, the president of the Federal Republic of Nigeria, Muhammadu Buhari unvailed the redesigned naira notes to the public at the Federal Executive meeting. It is obvious that he once a currency is redesigned; the old notes would become useless as they would no longer be regarded as a legal tender. To this end, the researcher is interested in investigating to know how the economy is being affected in the period when the currency is redesigned especially in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Money plays a vital role in the economy of a nation. In fact, it can be likened to the human heart in biology which helps to transport blood to all parts of the body. Without money, no business both in the private or public sector can thrive because it is needed for the day to day running of activities. People at the helm of affairs in the government ministries, parastatals, industries, companies etc with corrupt mindsets have always device means to hoard the naira notes in their quest to amass wealth to themselves, their children and generations yet unborn. This leads to the proliferation of money laundering cases in Nigeria. Currency hoarding does not allow enough money to flow and this as a result impedes the smooth running of economy and also brings about high cost of living. Unlawful duplication of currency which is termed counterfeiting also is a great menace. The above captured reasons make the Central Bank of Nigeria CBN to redesign naira. The question is how does the naira redesign affects the economy of Nigeria?

1.3 OBJECTIVES OF THE STUDY

The objectives of the study were:

1. To find out whether currency redesign has effects on a nation’s economy.
2. Examine the effects that currency redesign have on a nation’s economy.
3. Ascertain whether there is any relationship between currency redesign and improvement on a nation’s economy.
4. To investigate the problems that led to the redesigning of the currency.

1.4 RESEARCH QUESTIONS

1. Does currency redesign affect the nation’s economy?
2. What are the effects that currencies redesign have on a nation’s economy?
3. What is the relationship between currency redesign and improvement on a nation’s economy?
4. What are the problems that led to the redesigning of the currency?

1.5 STATEMENT OF HYPOTHESIS

The hypothesis used in accepting or rejecting the variables of this study is thus;

Hi: Naira redesign has effects on Nigeria economy.

1.6 JUSTIFICATION OF THE STUDY

This study has proved invaluable within the subset of research conducted under pragmatic investigation of how currency redesign affects different economies. Essentially, knowing how the currency redesign affects the Nigeria economy would remain the thrust of this study. The research will be of immense help to the central bank of Nigeria as they would know the effects of the currency redesign and then make use of them in the future if in case, the situation repeats itself. Future researchers would also benefit tremendously from the findings of this research as they may use it as sources of reference material.

1.7 DELIMITATIONS OF THE STUDY

The scope of this study is delimited to how the naira redesign affects the economy only in Nigeria. No attempt or whatsoever was made to investigate how it affects the economy of other nations.

1.8 LIMITATIONS OF THE STUDY

The process of conducting a successful research work especially at this hard time could be very frustrating and tiresome. The researcher in the course of carrying out this research encountered several challenges like poor funding, lack of fast internet connection, lack of contemporary reading environment for the researcher to make findings from books etc. The above problems encountered in the course of the research almost ruined the process but the researcher was able to conquer it because of his passionate love for research studies.

1.9 DEFINITION OF TERMS

The following terms were operationally defined as follows:

Currency: This is the Nigeria bank notes used as a legal tender in Nigeria.

Currency redesign: These are the changes made on the naira bank notes by central bank of Nigeria.

Economy: The system of production distribution, and consumption in an economy.

CBN: This is the acronym for Central Bank of Nigeria which is the body saddled with the authority to control money in Nigeria.

Naira: This is the currency of Nigeria

CHAPTER FIVE

SUMMARY OF FINDING, CONCLUSION AND RECOMMENDATIONS

5.1   Summary of Findings

        This study has made some interesting revelations.  This is because all the research findings have been in complete agreement with common sense and the theoretical concepts.

The banking industry is one of the sectors that play an imperative duty in the allocation of capital resources, wealth and risk sharing of future flows in any given economy or country. An efficient and effective banking industry in any economy is likely to facilitate increased growth and welfare, and it will smooth business cycles. These functions give banks a central position within the process of saving and investment allocation. However, these functions make banks vulnerable to different sources of shocks, and they have a negative effect on the economy because of banks’ central role. Because of the type of functions banks perform, there is need to have in place proper monetary policy involving issues such as barriers to entry, market concentration, the borrower-lender relationship, deposit insurance, and the taxation of financial intermediation in order to improve the performance of monetary policy on the new currencies.

5.2   Conclusion

This research project has been an attempt made to provide empirical evidence on the impact of new naira redesign on Nigeria economy.

For the findings, it has been discovered that financial institutions have an important role to play in the ongoing restructuring exercise in the country our economy has been bastardized by the past ill-defined objectives and frivolous expenditures and the task of rebuilding, it is not a challenge to our economics formulations and implementers as well as to our financial managers.

In conclusion, the policy of currency redesign by the CBN may hurt the Nigerian economy by creating a distortive impacts in the economy giving previous experience in terms of the cost of undertaking this exercise and the prevailing rates of Nigeria external debt, except the monetary authority is committed to stabilizing the economy. This does not imply that the policy itself is not good but the structural and institutional rigidity or features of the Nigerian economy before and after the introduction of the naira in 1973 has being the one that experienced immense and continuous structural bottle neck in the economy, weak institution, poor regulatory frame work, lack of adequate infrastructures, good roads and communication network and excessive reliance on crude oil since its discovery (mono-economy) which has subjected the economy into lopsided development in the international market. For instance, a fall in the international market price of crude oil without a corresponding decrease in the growth of government expenditure has resulted in high budget deficits that stimulate high external debt with its adverse implication on monetary and price stability.

5.3   Recommendations

However, in Nigeria it could certainly be seen that this policy will have more of negative than positive effects on the Nigerian economy, due majorly to the peculiarity of Nigerian political system in terms of its deeply ingrained corruptive nature and the volatility of it political, security and exchange rate policies, therefore the crave for currency redesign may not singlehandedly resolved the bedeviling economic issues but through a more agriculturally productive and broad base domestically secured economy inspired by patriotism and diversifications, therefore the aforementioned policy recommendations should be considered.