The Nigerian government has been cautioned by the World Bank that the transition period for the initiative to redesign the naira being undertaken by the Central Bank of Nigeria, or CBN, is too short and will have a negative impact on the economy of the country, particularly on those who are impoverished.
This was mentioned by the bank in its study titled "Nigeria Choice," which was included in the most current edition of the Nigeria Development Update (NDU).
It's important to keep in mind that the Central Bank of Nigeria (CBN) has already started issuing the freshly redesigned N200, N500, and N1000 bills into circulation.
In response to the policy, the World Bank revealed that rapid currency demonetization results in short-term costs for vulnerable households and small businesses. This is especially true for Nigerians, who rely heavily on daily cash transactions.
Inflation, floods, unexpected spikes in fuel prices, and the ongoing demonetization of older naira banknotes are some of the factors that have been cited as contributing to the financial strains that many households and businesses are currently experiencing, according to the report.
Since naira banknotes have not been changed for the past twenty years, the Nigerian naira may be overdue for a redesign, despite the fact that redesigning currencies on a regular basis is a standard practise in other parts of the world.
It is possible that the timing of this demonetisation and the short transition time may have a negative impact on economic activity, particularly for the poorest households, as indicated in the report.