Naira Redesign and Economic Growth in Nigeria: Prospects and Challenges

Abstract

This paper theoretically examines the effect of Naira redesign on economic growth in Nigeria. The objective of the study is to determine the economic implications of Naira redesign, reasons for redesigning Naira and the proposed relevance of Naira redesign policy of the Central Bank of Nigeria. The study discovered that the key rationale for currency redesign were to reduce the level of hoarding of money by affluent Nigerians, to mitigate counterfeiting of the currency and to control the amount of money in circulation with the view of controlling the rate of inflation in Nigeria. The study also discovered that there are both positive and negative sides to Naira redesign which includes the fact that Naira redesign could lead to reduction in the level of cash insecurity and money laundering, huge deficit cost to the economy, a rise in price level and the mitigation of counterfeiting in the economy. The study suggests that the redesign of Naira may not be the antidote to the consistent depreciation of the country’s currency and the focus of the Central Bank of Nigeria should be the stabilization of Naira. The study concludes that Naira redesign is not the best thing to be done currently in the economy as it could lead to more challenges and so the Government of Nigeria should attend to more pressing issues.