Impact of Naira Redesign on Nigeria Economic Development
CHAPTER ONE
Objective of the study
The aim of the study is to investigate the impact of naira redesign on Nigeria economice development. The specific objectives are;
- To find out the impact of redesigning naira on Nigeria economic development
- To find out the influence of redesigning on inflation rate in Nigeria.
- To find out the impact cost of redesigning naira on Nigeria economic development
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Under the dollarization regime, both domestic price inflation and the output gap rise in response to the domestic productivity shock as well as the foreign demand shock. The reason happens to be that both shock raise permanent income and stimulate domestic demand, which raises desired expenditure on imported goods as well as increase in the prices of domestically produced goods. Lucas (1976) reacted appropriately to the changes in the monetary regime, the paper asserted that authorities can make a perfectly credible commitment to a particular monetary policy regime, dollarization can be represented as a perfectly credible exchange rate peg, dollarization to him implies that the home interest rate is identical to that of the foreign country whose currency serves as an anchor, he also considered two alternative monetary policy regimes of “strict consumer price inflation(CPI) targeting and Taylor’s (1993) rule in which the nominal interest rate responds to the output gap as well as CPI inflation In (2016), the Indian government under Prime Minister Narendra Modi had a plan to stop corruption and reduce the amount of money in circulation by withdrawing and reintroducing the 500 and 1,000 denominations of the Indian rupee within six months In 2018, a Bloomberg report stated that the scheme froze “agriculture and small businesses with a liquidity shock, put people through unnecessary hardship, disrupted supply chains, and destroyed demand for everything from autos to property”. Net savings in India were reduced by 50 per cent a year after the policy was implemented. The currency in circulation also increased to 20 trillion rupees from 18 trillion rupees before the policy. According to Earnest S.O (2011), opined that, Nigeria being an highly import-dependent nation which severely eroded the strength of her currency(naira) relative to other currencies, in which the major function of the central banks is to achieve price and exchange rate stability, he’s of the opinion that Nigeria has not fare well in this regards, he critically evaluate the effect of the new currency re-design exercise of the CBN, he sees the currency redesign as the means by which government attempted to reassert monetary sovereignty, in other words if citizen loses confidence in the national currency, they may begin to use foreign currencies, in which he termed the process as “Dollarization” reasons the Central Bank of Nigeria initiated the ideas of currency redesign exercise tagged “PROJECT CURE”. Against this backdrop the study also examines the potential benefits of the redesign policy implications on the Nigeria economy. (Aurangzeb, 2012) posit that a well-structured, strong and developed financial sector is required to achieve a sustained capital growth. More importantly, the financial sector also serves as the avenue through which the monetary policies of the government are carried out.
CHAPTER THREE
RESEARCH METHODOLOGY
In this chapter, the researcher presents the methods employed in conducting the study. The section is arranged based on the following: research design, area of the study, population of the Study, sample and sampling technique, instrumentation, validity, reliability of the instrument, leadership instrument, scoring of the instrument, and method of data analysis.
Research Design
The study adopted an Ex post facto research design. Ex post facto design, also known as “after-the-fact” research. This research design looks into how an independent variable (groups with certain qualities that already exist prior to a study) affects a dependent variable. In an ex post facto design, a researcher does not randomly assigned people to an experimental group or control group but people are purposefully put in a particular group based on some prior attribute they have. This design is appropriate because it helps the researcher to obtained prior existing data that were used in taking decision for the study.
CHAPTER FOUR
Data Analysis
Chapter Five
Summary
After subjecting the hypotheses under test, the following were found:
There is no significant impact of redesigning naira on Nigeria economic development. This is true owing to the fact that newly redesigned naira which went into circulation last week may have negative effect on economic activity especially poor Nigerians due to its timing and short transition period.
There is no significant the influence of redesigning naira on inflation rate in Nigeria. The slope of – 1.081 shows that the relationship between redesigning naira and inflation is inversed but statistical significance. This means that at every unit increase in redesigning naira, inflation will drop by 1.081 units. This finding is in line with what is pragmatically obtainable. The study adopts the facto regression technique and established that inflation has positive but not significant impact on economic development in Nigeria. The result also revealed that redesigning naira has negative and significant effect on economic developmnent
in Nigeria
There is no significant impact cost of redesigning naira on Nigeria economic development. This is true owing to the fact that the cost of newly redesigned naira which went into circulation last week CBN may has not, and is most unlikely, to disclose the cost of redesigning our banknotes. The speculation is that, the amount is humongous. More so, as it may actually have been contracted to a foreign firm and not the Nigeria Printing and Minting Company, because of the high security features in the currencies in order to make it extremely difficult to be counterfeited.
Conclusion
I cannot but agree more with the arguments of the proponents of this CBN policy to redesign the 200, 500 and 1000 denominations of our Naira notes. No doubt, the policy, if successfully implemented, will effectively demobilise the ill-gotten cash at the disposal of these heartless politicians and make them utterly useless. And, certainly, in the short-term, Nigerians are bound to suffer the consequences of the rise in the prices of general commodities. But, come to think of it, have we not developed a thick-skin to suffering in this country? My only apprehension for now, is whether the team will persevere to withstand the anticipated pressure from the unscrupulous elements in our midst, to see to the full implementation and realisation of the long-term benefits of the initiative.
Recommendation
The study recommended government and CBN for much cirlculation of the new redesigning naira to help the poor survive and not to bring more inflation in the country
References
- https://punchng.com/naira-redesign-will-affect-the-poor-smes-wbank
- https://www.vanguardngr.com/2022/12/world-bank-warns-cbn-on-negative-impact-of-naira-redesign-on-economy-poor-households/
- https://www.thisdaylive.com/index.php/2022/11/08/naira-redesign-economic-or-political-expediency
- https://thenationonlineng.net/naira-redesign-any-implications-for-the-economy
- https://unizik.edu.ng/cbn-curency-redesign-gains-pains-and-implication-to-rular-dwellers/?utm_source=rss&utm_medium=rss&utm_campaign=cbn-curency-redesign-gains-pains-and-implication-to-rular-dwellers
- Bergen, J. V. (2017, March 7). 6 Factors That Influence Exchange Rates. Retrieved from Investopedia: http://www.investopedia.com/articles/basics/04/050704.asp
- Bosworth, B., S. Collins, and C. Yu-chin. (1995). Accounting for Differences in Economic Growth. Unpublished manuscript. Brookings Institution, Washington, DC.
