Economic Impact and Coping Mechanisms of Small and Medium-Sized Enterprises (S.M.E.s) in Nigeria during Currency Redesign
DOI:
https://doi.org/10.14738/abr.119.15500Keywords:
Currency redesign, Naira redesign, cashless policy, monetary policy, Central Bank of NigeriaAbstract
On October 26, 2022, the Central Bank of Nigeria (CBN) introduced a redesign of the N1, 000, N500, and N200 Naira currency notes to promote a cashless economy. Despite the well-intentioned government initiative, this policy posed significant challenges to Small and Medium Enterprises (SMEs) in Nigeria, resulting in decreased sales and productivity. This study aims to assess the impact of the currency redesign on small business performance, gauge awareness and preparedness among SMEs regarding the redesign, explore coping mechanisms employed by SMEs during the currency overhaul in Lagos, Nigeria, and propose enhancements for future currency redesign strategies. Utilizing a structured online questionnaire, primary data was collected from 310 SMEs in the Yaba/Ojuelegba region of Lagos, Nigeria, employing a stratified random sampling technique. Both SPSS and Excel were utilized for data analysis. The findings indicated a considerable awareness of the currency redesign among business owners, yet inadequate preparedness due to limited resources and information. The currency redesign had a negative impact on SMEs, particularly in terms of decreased sales, but had little impact on workforce reductions. Price adjustments and better terms with suppliers were among the coping strategies, with point of sale (P.O.S.) machines emerging as the primary alternative payment method. Increased publicity, extended implementation periods, ample new currency supply, harmonized policies across government branches, alignment of monetary and fiscal policies, and increased implementation flexibility are among the recommendations for improved future implementations.
References
Abubakar Y. & Yandaki U.A. (2023), The 2022-naira redesign programme in Nigeria: implications on the local economy and financial history. African Journal of Accounting and Financial Research 6(2), 22-32. doi:10.52589/AJAFR-GSBSQG7S
Adeoye, B., & Shobande, A. O. (2017). Monetary policy transmission mechanism and macroeconomic aggregates in Nigeria. Caleb Journal of Social and Management Sciences, 3(2), 115-134. doi:10.2139/ssrn.3467521
Alimi, R. S. (2012). The quantity theory of money and its long-run implications: Empirical evidence from Nigeria. European Scientific Journal 8 (12). 272-288. Retrieved from mpra.ub.uni-muenchen.de
Central Bank of Nigeria. (2023). History of Nigerian Currency. Retrieved from https://www.cbn.gov.ng/currency/historycur.asp
Central Bank of Nigeria (CBN) (2022). Frequently asked questions and answers on Naira redesign. What you need to know. Retrieved from www.cbn.gov.ng
Central Bank of Nigeria. (2022). Issuance of New Naira Banknotes. Press Remarks by the Governor of Central Bank of Nigeria. Retrieved fromwww.cbn.gov.ng
Central Bank of Costa Rica (2021). Banknotes of Costa Rica, 2021 Series. Retrieved from www.bccr.fi.cr
Cheong, J., & Choi, J. (2012). The impact of the new currency issuance on the liquidity of banks in South Korea. Journal of Money and Finance, 31(3), 605-618.
Ekong, U. M., & Ekong, C. N. (2022). Digital currency and financial inclusion in Nigeria: lessons for development. Journal of Internet and Digital Economics.
Eurochange (2022). World currency symbols list - names, countries, codes and symbols. Retrieved from www.eurochange.co.uk
Hornborg, A. (2017). How to turn an ocean liner: a proposal for voluntary degrowth by redesigning money for sustainability, justice, and resilience. Journal of Political Ecology, 24(1), 623–632. International Monetary Fund (I.M.F.) (2018). Currency redesign and the introduction of new denominations. Retrieved from www.imf.org
Kregel, J. (2010). An Alternative perspective on global imbalances and international reserve currencies. Economics Public Policy Brief Archive. Levy Economics Institute
Lawal, S. A. (2023). An Evaluation of the Scarcity of New Naira Notes and Slow Business Growth in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(6), 110-118.
Marcela, M.W. & Richard, G. A. (2007.). Currency design in the United States and Abroad: Counterfeit deterrence and visual accessibility. Federal Reserve Bank of St. Louis Review. 371-414. doi:10.20955/r.89.371-414 National Research Council. (N.R.C.) (1993). Counterfeit deterrent features for the next-generation currency design. Committee on next-generation currency design and commission on engineering and technical systems. National Academy Press of the National Academy of Sciences, Washington, DC:
Nwachukwu, D., & Nwogu, C. U. K. (2022). Monetary Policy and Marketing Performance of Businesses in Port Harcourt: A Case of Naira Redesign in 2022.
Olofin, O. P., Adetayo, F. O., & Tella, S. A. (2015). Currency redesign and the promotion of security of Nigeria's currency: An empirical analysis. Cogent Economics & Finance, 3(1), 1093823. doi:10.1080/23322039.2015.1093823
Obilor, N. M. (2023). Coping strategies adopted by informal trader during naira scarcity in 2023. Unilag Journal of Business, 9(1), 85-96.
Olujobi, O. M. & Chuba, M. A. (2023). Macroeconomic implications of the new currency refurbishment and capital formation in Nigeria. The Seybold Report, 1951-1968. doi: 10.17605/osf.io/3jyd6
Osaloni, B. O. & Efuntade, A. O. (2023). Effect of currency redesigning on the deposit money banks in Nigeria. Journal for Studies in Management and Planning, 9 (4). 1-22. doi 10.5281/zenodo.7903903
Otitoju, M. A., Dirisu, I H., Ojokojo, P.P. & Abdul, F. (2023). Cashless policy and naira redesign of the Central Bank of Nigeria (CBN): A review. Journal Of Global Economics and Business, 4(14), 45-59. doi:10.58934/jgeb. v4i14.172
Pillah, T.P. (2023). Currency redesign and monetary policy of Nigeria: An evaluation. International Journal of Public Administration and Management Research, 8 (4), 46-53. Retrieved from journals.rcmss.com
Whelan, K. (2010). Global imbalances and the financial crisis. Paper for the European Parliament’s Committee on Economic and Monetary Affairs.
World Bank. (2011). Banknote redesign: An overview of current practices and future trends. Retrieved from www. openknowledge.worldbank.org
Yifru, A. A., & Zerihun, M. A. (2018). The effects of currency redesign on liquidity and money supply: Evidence from Ethiopia. Ethiopian Journal of Economics, 27(2), 91-114.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Olufemi Aladejebi, Oladimeji, Johnson Abiodun, Amao-Taiwo Bukola
This work is licensed under a Creative Commons Attribution 4.0 International License.
