Naira Redesign Will Negatively Affect Poor Nigerians, SMEs — World Bank

The World Bank has warned the newly redesigned naira which went into circulation last week will negatively affect poor Nigerians and small businesses due to its timing and short transition period.

The Washington-based bank revealed this in a new report titled, 'Nigeria Development Update'.

The report reads in part, “While periodic currency redesigns are normal internationally and the naira does appear to be due for it since naira notes have been redesigned for two decades, the timing of and short transition period for this demonetization may have negative impacts on economic activity, in particular for the poorest households.

“International experience suggests that rapid demonetizations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, potentially being particularly affected due to being liquidity-constrained and heavily reliant on day-to-day cash transactions.

At present, households and firms already face elevated financial pressures from prolonged, high inflation, recently compounded by external food and fuel price shocks, and the severe floods, and phasing out existing naira notes over a short time period may add to their challenges.”