1.1 BACKGROUND TO THE STUDY
The currency of every nation has a tremendous effect on the economy and remains one of those distinguishing features of a nation. The effective management and distribution, trade, as well as consumption of goods and services depend largely on the effectiveness of a nation’s currency.
According to Njoku (2009), in a monetized economy as it is the case with Nigeria; money is a viable tool for economic transformation, growth and progress. The optimum distribution of economic resources and the efficient functioning of a modern economic system would not be possible without the monetary apparatus which, by and large enables the government to provide the governed with basic amenities and perform other related functions for the benefit of the country.
Central Bank of Nigeria CBN, asserts that during the pre-colonial era, different cultures used a variety of items as means of exchange. These included cowries, manilas, beads, bottles, and salt amongst others. They (CBN), also notes that the first currency issue in Nigeria was undertaken sequel to the colonial ordinance of 1880 which introduced shillings and pence as the legal tender currency in west Africa. The units of coins, managed by Bank of England were one shilling, 1 penny 1/2, 1/2 penny and 1/10 penny and were distributed to a private bank, of British west Africa till 1912 (www. CBN. Gov.ng).
In Akpabuyo community in cross River State, Nigeria, people pay for what they need with what they have, instead of using coins and banknotes. They say its part of their culture that they want to preserve. BBC News. Africa (2021)
To further buttress the above, Shola Olayiwola (2021) opines that in Africa, items adopted as currencies were to a large extent influenced by ecological determinants. Cattle, grains and farming implement were adopted as currencies in North Africa while farming implements and the raw materials were more emphasized in the forest areas of west and central Africa.
Obviously, Nigerians being a country in Africa was not left out of the olden day’s method of trading. No wonder, David Odunlami (2021) notes that Nigerians didn’t start using naira until 13 years after independence.
On January 1st 1973, Nigeria started using its own currency. It was named after naira by Chief Obafemi Awolowo. Naira and kobo was rolled into the Nigerian economy with bank notes and coins. In 1973 also, we had ½ 1, 5, 10 and 25 kobo coins and 50 kobo, N5 and 10 bank notes. The half and one kobo were made with bronze and the higher denominations in cupro-nickel N1 is 100 kobo. In 1977, the N20 was introduced. In 1987, the 5 kobo and 10 kobo and coins removed from circulation and in 1991, the 50 kobo and N1 notes were changed to coins. In 1999, the 100 note was introduced in 2000 N200 was introduced. N500 was introduced in 2001 and N1000, the largest Nigerian in circulation was produced (www. Zikoko. com).
The central bank of Nigeria CBN has in many occasions redesigned the naira notes to suit different situations. For example, on 30th September 2009, the redesigned N50, N10 and N5 bank notes were converted to polymer substrate following the successful performance of the N20 (Polymer) banknote.
Also, as part of CBN’s contribution toward the celebration of the nations’ 50th anniversary of Nigeria independence and 100 years of its existence as a nation issued the N50 commemorative polymer banknote on 29th September 2010 and the N100 Commemorative banknote on 19th December, 2014 respectively.
Recently the Governor of central bank of Nigeria, Godwin Emefiele on October 26, 2022 announced that new naira notes would be introduced to replace the current N200, N500 and N1000 naira notes. Emefiele said that the redesign will take effect from Thursday December 15 2022. He also said that existing notes would seize to be regarded as a legal tender by January 31st 2023 (Vanguardngr. com).
On 15th November 2022, the president of the Federal Republic of Nigeria, Muhammadu Buhari unvailed the redesigned naira notes to the public at the Federal Executive meeting.
It is obvious that he once a currency is redesigned; the old notes would become useless as they would no longer be regarded as a legal tender.
To this end, the researcher is interested in investigating to know how the economy is being affected in the period when the currency is redesigned especially in Nigeria.
1.2 STATEMENT OF THE PROBLEM
Money plays a vital role in the economy of a nation. In fact, it can be likened to the human heart in biology which helps to transport blood to all parts of the body. Without money, no business both in the private or public sector can thrive because it is needed for the day to day running of activities.
People at the helm of affairs in the government ministries, parastatals, industries, companies etc with corrupt mindsets have always device means to hoard the naira notes in their quest to amass wealth to themselves, their children and generations yet unborn.
This leads to the proliferation of money laundering cases in Nigeria.
Currency hoarding does not allow enough money to flow and this as a result impedes the smooth running of economy and also brings about high cost of living.
Unlawful duplication of currency which is termed counterfeiting also is a great menace.
The above captured reasons make the Central Bank of Nigeria CBN to redesign naira.
The question is how does the naira redesign affects the economy of Nigeria?
1.3 OBJECTIVES OF THE STUDY
The objectives of the study were:
1. To find out whether currency redesign has effects on a nation’s economy.
2. Examine the effects that currency redesign have on a nation’s economy.
3. Ascertain whether there is any relationship between currency redesign and improvement on a nation’s economy.
4. To investigate the problems that led to the redesigning of the currency.
1.4 RESEARCH QUESTIONS
1. Does currency redesign affect the nation’s economy?
2. What are the effects that currency redesign have on a nation’s economy?
3. What is the relationship between currency redesign and improvement on a nation’s economy?
4. What are the problems that led to the redesigning of the currency?
1.5 STATEMENT OF HYPOTHESIS
The hypothesis used in accepting or rejecting the variables of this study is thus;
Hi: Naira redesign has effects on Nigeria economy.
1.6 JUSTIFICATION OF THE STUDY
This study has proved invaluable within the subset of research conducted under pragmatic investigation of how currency redesign affects different economies.
Essentially, knowing how the currency redesign affects the Nigeria economy would remain the thrust of this study.
The research will be of immense help to the central bank of Nigeria as they would know the effects of the currency redesign and then make use of them in the future if in case, the situation repeats itself.
Future researchers would also benefit tremendously from the findings of this research as they may use it as sources of reference material.
1.7 DELIMITATIONS OF THE STUDY
The scope of this study is delimited to how the naira redesign affects the economy only in Nigeria. No attempt or whatsoever was made to investigate how it affects the economy of other nations.
1.8 LIMITATIONS OF THE STUDY
The process of conducting a successful research work especially at this hard time could be very frustrating and tiresome. The researcher in the course of carrying out this research encountered several challenges like poor funding, lack of fast internet connection, lack of contemporary reading environment for the researcher to make findings from books etc.
The above problems encountered in the course of the research almost ruined the process but the researcher was able to conquer it because of his passionate love for research studies.
1.9 DEFINITION OF TERMS
The following terms were operationally defined as follows:
1. Currency: This is the Nigeria bank notes used as a legal tender in Nigeria.
2. Currency redesign: These are the changes made on the naira bank notes by central bank of Nigeria.
3. Economy: The system of production distribution, and consumption in an economy.
4. CBN: This is the acronym for Central Bank of Nigeria which is the body saddled with the authority to control money in Nigeria.
5. Naira: This is the currency of Nigeria