Naira Redesign Project Topics

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1. Analysis of Economic costs and benefits of new naira redesign policy

Monetary policy is controlled by the CBN. It is a perfect example of a regulating body. The regulator may only take action if the advantages of the suggested course of action outweigh the disadvantages, which is the norm for making regulatory judgments like the one it is detailing concerning the redesign of the currency. In addition to financial and commercial costs and rewards, a complete cost-benefit analysis would also include social and political costs and rewards.

We should be aware that a nation’s currency has a significant impact on its economy. It decides on issues such as currency exchange rates, general price levels, total national income, output and productivity, and employment levels for labor and capital. and any leftover cash.

It is generally acknowledged that redesigning money may reduce counterfeiting, particularly when the security of the current design can be readily bypassed. Another reality is that public financing up to billions of Naira would be required for the design and fabrication of new currency. The production and design of this new Naira should be backed up by reliable information from CBN about the frequency of fake Nairas in circulation. According to the CBN’s most recent report, the 2020 Currency Report, 67,265 counterfeit notes for a total of N56.83 million were seized in 2020. Compared to 84,934 items valued N64.71 million in 2019, this reflects a 20.80% volume decline and a 12.18% value decrease. Globally, there are 100 counterfeit items for every million. In 2020, there were 13 pieces of fake currency for every million banknotes in circulation, down from 20 pieces for every million in 2019. This demonstrates that the problem of counterfeit money is not as pervasive as would need a change in the currency.

2. Impact of Naira Redesign on Entrepreneurial Business Activities in Nigeria

For instance, on Friday, February 3, 2023, enraged protesters destroyed a Wema bank branch in Ibadan due to a lack of naira notes and gasoline. Lack of both old and newly redesigned naira notes forced several POS operators to close their operations. Those who opened had exorbitant prices.

Already occurring kidnapping and banditry incidents add to the pressure on Nigerians to withdraw their hard-earned money from their bank accounts through a chaotic situation that could lead to widespread protests like the ENDSars. The situation with the new naira notes in Nigeria has demonstrated that the central bank’s leadership there was more focused on the benefits of the cashless policy than on the severe economic harm it would cause the populace.

3. The Legal Framework of CBN to Make Monetary Policy Decision on Naira Redesign

According to the CBN Act, the Central Bank must independently and impartially administer monetary policy. Given how crucial monetary policy is to long-term economic growth, there is a heated dispute over whether the Central Bank should be beholden to the government. The Free Market (FM) supports the creation of a body that supervises monetary policy and is fully independent of party politics. The Governed Market model (GM) contends that elected authorities’ strategic economic policy decisions should not take precedence over monetary policy. Nigeria incorporated the FM approach into the CBN Act. It grants the Board of Governors the authority to make monetary policy decisions without interference from partisan elected or appointed officials. It should be noted that Section 19 of the CBN Act’s mandatory approval of the Naira design is the only requirement.

4. The Effect of the Naira Redesign Policy on Rural Dwellers in Nigeria

Unbanked rural residents provide a problem. Most rural residents don’t have bank accounts, making them ineligible for financial services. According to CBN, in order to use the new notes, the old notes must be placed into an account. The disruption to their cash-based business operations would result from this.

In order to establish its presence, the CBN must persuade Deposit Money Banks and Microfinance Banks to open branches or agency banking activities in these rural areas.

Famous community members’ residences and market districts may have agency banking facilities where their financial requirements may be satisfied. Community leaders should seek the advice of professionals to understand how to use USSD, Mobile Banking, and POS for their payment, deposit, and transfer services. At community agency banks, clients may open accounts. As a consequence of this policy, the deposit and withdrawal limits for tier one and tier two accounts should be raised, and for tier three accounts, a reference letter from the local leaders should be taken into consideration in place of a utility bill.

5. Impact of Naira Redesign on the Socio-Economic Development of Nigeria

The redesign of the Nigerian currency is a victory in the fight against counterfeit money and will significantly increase the country’s cash flow. Counterfeiting has become quite difficult since money fraud has become a substantial source of income for certain people. Nigerians, who do not utilize the banking system, have established factories and are only producing bank notes, according to CBN. The Nigerian Central Bank is unable to detect fake currency. If the regulating body is unable to resolve this, there is a problem, hence new thinking is necessary. The reduction of abduction and the fast expanding ransom economy is a secondary purpose of the naira makeover. They often hoard money, which is forbidden in their line of work.

Project topics on Naira redesign