Redesigning The Naira by CBN Will Be Counter-Productive to The Nigerian Economy.

The major essence of keeping money outside the bank is for a transactional motive, precautionary motive, and speculative motive, it simply means most money kept by individuals is for this above except dollars that politicians, businesses or racketeers kept for profit motive.

 

 

 

Looking at the negative externalities, the targeted politicians, businesses, and dollar racketeers will choose to hold Dollars, not Naira, which will negate the aims of the Central Bank of Nigeria and increase inflation in the economy

 

Another negative externality is the Naira which is in west African countries that will have to be returned to Nigeria in cash, this will be counter-productive because Nigeria should work more deliberately for a single currency to benefit from the Africa continental free trade agreement (AFCFTA),

 

 

 

Though the redesign policy will bring some money back to the central banks of Nigeria, the majority of Nigerian’s monies are with the banks, especially the domination that is not considered for redesigns such as the 5 Naira, 10 Naira, 20 Naira, 50 Naira and 100 Naira

 

 

 

The political economy of it reflects president Muhammadu Buhari’s ideology 40 years ago during his military era, this principle is much operational in the military era, most businesses that engage in counterfeiting and racketeering will find a way to quickly return all the money at their disposal back to the system because the time is enough for them.

 

 

 

It also shows a political motive to weaken politicians who are keeping money for the election in 2023. The timing is more inappropriate for political activity and election, it is only the United Kingdom that is currently having a new redesigned currency in circulation because of the change from Queen Elizabeth to King Charles in their currency, the aim is to reflect the new king in the money, not a monetary policy or to curb inflation

 

 

 

Currencies are expected to be redesigned every five to eight years to prevent the counterfeiting and hoarding of the currency, changing or redesigning of currency was last achieved in the last twenty years. The major motive for this is to reduce inflation according to Central Bank, Nigeria’s current inflation is food-driven and foreign exchange challenges. The sudden redesign and changes are likely to give the dollar more value in Nigeria.

 

 

 

The logistics, and the cost of printing and circulating the currency are other things to be considered by the Central Bank of Nigeria, it will be huge on the country as we do not print money in Nigeria.

 

 

 

We only hope it will help our security in terms of reducing the counterfeiting and help in tracing where the monies are located per time.

 

 

 

* Dr. Aliyu O.Ilias,is a Political-Economist, Author(Customer Service Management,Understanding Customer Experience in Africa & CEMBundle).https://bit.ly/2X1scUP

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