Cbn’s Naira Redesign: Its Impact and Benefits
CHAPTER ONE
Objectives
The main objective of the research is to assess the impact and benefit of CBN new naira redesign in Nigeria, the study’s specific objectives are:
- To examine the effects of the Naira redesign on the level of counterfeiting in circulation.
- To evaluate the fiscal implications of the Naira redesign, including the costs of production and distribution, and the withdrawal of the old notes from circulation.
- To assess the public’s perception of the Naira redesign and its impact.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter presents the literature review of the study. This is done under various subheadings that are classified under the conceptual review, theoretical review and the summary of literature reviewed.
Conceptual Review
Concept of Currency redesign
Currency redesign refers to the process of changing the physical design or appearance of a country’s currency. This can be done for various reasons, including improving the currency’s security features, updating its design to reflect changes in the country’s political or economic landscape, or simply to give the currency a fresh look (Campenhout, 2013). Currency redesign can involve changes to the size, color, images, and denomination of the currency, as well as the addition or removal of security features such as watermarks, holograms, and serial numbers. The redesign process may also involve the issuance of new banknotes or coins and the withdrawal of old ones from circulation (Faber et, al., 2017).
It can have various effects on the economy, including changes in the exchange rate and inflation, as well as an impact on the economy’s stability and growth. Therefore, the decision to redesign a country’s currency is usually made after careful consideration of the potential economic, political, and social impacts (Campenhout, 2013). Currency redesigning has various reasons or purpose intended for it to serve. These are:
Improving security features: One of the primary reasons for currency redesigning is to improve the security features of the currency. This can include adding new anti-counterfeit measures such as holograms, watermarks, and security threads, or upgrading existing security features (Heskett, 2019).
Reflecting changes in the political or economic landscape: Currency redesigning can also be done to reflect changes in the country’s political or economic landscape. For example, a redesign can reflect the changing status of the country, such as the addition of new territories or the elimination of old ones (Hollanders, 2016).
Modernizing the currency design: Currency redesigning can also be done to modernize the currency design and give it a fresh look. This can include updating the images, colors, and overall aesthetic of the currency to make it more appealing to the public (Heskett, 2019).
Preventing counterfeiting: Currency redesigning can also be done to prevent counterfeiting. This can include the addition of new security features, as well as the removal of old, easily-counterfeited banknotes from circulation (Laakso, 2015).
Updating the currency’s denomination structure: Currency redesigning can also be done to update the currency’s denomination structure. For example, a country may choose to introduce new, smaller denominations of banknotes or coins to make transactions easier, or remove high-denomination banknotes to reduce the risk of money laundering and other illegal activities (Hollanders, 2016).
Responding to economic conditions: In some cases, currency redesigning can be done to respond to economic conditions, such as high inflation or rapid currency depreciation (Palafox, 2015). By redesigning the currency, the government can demonstrate its commitment to stabilizing the economy and restoring public confidence in the currency.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter introduced the description of the adopted research methodology which was applied during the study. It unravels the research design, population of the study, sample population, research instruments, instrument validity, and instrument reliability.
Research Design
A research design is a basic plan that guides the data collection and analysis phases of the research. (Kinnear & Taylor, 1996; Churchill & Iacobucci 2005) define research design as the blueprint that is followed to complete the study and it ensures that the study is relevant to the problem and will use economical procedure.
Thus, the research design for this study is Survey Research design. Survey research is defined as the collection of information from a sample of individuals through their responses to questions. (Check & Schutt, 2012, p 160). The survey type of research allows for a variety of methods to recruit participants, collect data and utilize various methods of instrumentation.
Population of Study
The entire number of units from whom evaluation representatives are drawn is referred to as the population (Parahoo, 2014). As defined by Saunders et al. (2012), a population is the total number of cases from which a sample is selected. Using the Nigerians as a case study, this research aimed to determine the impact and benefit of naira redesign.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter is targeted at analyzing the data collected adopting a simple percentage and frequency presentation. The presentation is done in a tabular form for clarity and easy understanding. To get the research data, 145 questionnaires were distributed.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
Conclusion
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.
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 diversification.
Recommendations
Comprehensive harmonization of both monetary and fiscal policies: For ultimate attainment of CBN goals of exchange rate stability, both the Central Bank of Nigeria and government (at all levels) should work hand-in-hand. For instance, if government pursues expansionary fiscal policy and CBN pursues contractionary monetary policy, there shouldn’t be any contradictions or conflict of interest in attainment of steady interest rates
Increasing exports of internally or domestically manufactured goods and services; Nigeria being a highly import dependent nation, Nigeria should improve the production and exports of manufactured good, this Wii have much solid effect on the currency purchasing power and reduce the prevailing issues of dollarization rather than the policy of redesigning.
Central Bank of Nigeria must implement robust measures to control Nigeria’s monetary policy to ensure a stable macroeconomic variable suitable for steering the country’s economic growth, away from the existing policies of which directly affects the stock market’s results.
Redesigning currencies should be driven by much more legal and political Wii, to improve a currency’s security by enabling countries to keep counterfeiting low and stay afloat of any counterfeiting threat.
CBN should encourage more cashless economy, and stave-off cash hoarding this will bring more people into the financial sector, and even more ambitiously, reduce the incidences of kidnapping and terrorism because there will be no notes in circulation for ransom payments
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