The Effect Of

THE EFFECT OF REDESIGN NAIRA NOTES ON SMALL AND MEDIUM
SCALE BUSINESSES IN KANO SOUTH RURAL AREAS
I. A. Njidda
[email protected]
Abstract
The Central Bank of Nigeria (CBN) on October 26, 2022 announced that higher denominations
of the Naira including N200, N500 and N1,000 would be redesigned and introduced into the
economy from December 15, 2022, and January 31, 2023 was set as deadline when the old notes
will no longer be legal tender. The CBN alleged that unscrupulous people have abused the naira,
from hoarding to counterfeiting the notes. In addition, the CBN said it was compelled to redesign
the naira because of the prevailing level of security situation in the country. One of the major
areas of concern is how the rural people and their businesses will seamlessly transit from using
the old notes to the new ones, considering the limited time set for the expiration of the old notes
and the challenges associated with accessing banking services in rural areas like Kano south.
Thirty-two business owners, two from each of the sixteen local government councils in Kano
south were interviewed. Data collected were analyzed using qualitative method and it was found
that although the policy may have its advantages, but many businesses transactions would
experience setbacks as a result of many inconveniences, unless certain factors are put into
consideration.
DISCUSSION OF FINDINGS
Although the redesigned naira notes comes with a skewed monetary policy to control the excess
of Naira notes in circulation. The Central Bank of Nigeria (CBN) had earlier set a limit of
withdrawals by both individuals and corporate bodies, however, reviewed it a week later.
Conversely, the apex bank had on January 6, 2023 banned over-the-counter withdrawal of the
new notes. It has directed the deposit money banks to load their Automated Teller Machines
(ATM) with only new notes to ensure that the currency circulates across the nation ahead of the
January 31, 2023 deadline when the old notes will no longer be legal tender.
The study arrived at the following conclusions:
1. Cash is the major means of all kinds of business transaction in the area
2. The new naira notes are not sufficiently in circulation. They are rarely seen in the markets
3. People make as much deposit as they make withdrawal to keep business going
4. There is uneasy access to banking services in the Kano South area
Based on the above conclusions, it is evident that the policy of the redesigned naira notes will not
go well with majority of the businesses in the Kano South Senatorial District if certain laidback
factors are not put into consideration. The following hitches may likely be experienced.
1. Based on the findings, there will not be an equilibrium between demand and supply of
cash, therefore, there would be likely shortage of cash, which primarily facilitates
business transactions in the area, and since the use of alternative online medium to carry
out transactions is not effectively reliable in the zone, a lot of business transaction would
suffer setbacks.
2. The transition time may not be enough considering the fact that it is less than a month to
the deadline and the new notes are still not accessible even in the bank. Thus, it is feared
that the old notes could still be in circulation beyond the deadline and that could crumble
a lot of business owners where extension is not granted, as huge amount of money would
be invalidated or seized to be a legal tender beyond 31st January 2023.
3. The unbanked and the elderly may not be able to cope with the inconveniences of this
change since there are no sufficient banks in these local areas. Thus, due to an uneasy
access to banking services in the area, there would be challenges in people getting to the
bank to retire the old notes as banks would be crowded by customers in an effort to meet
deadline, this could lead to so many people being unable to retire the old notes.
However, if the new naira notes would be sufficiently in circulation before the old notes’
deadline, businesses would seamlessly transit easily to the new notes regime. In addition, the
areas having poor network coverage can be looked into. The network in the area can be
improved, and there should be more awareness on the use of cashless alternative means of
business transaction so that people in the area could take advantage of the system for easy
business dealings.
 A further study could be conducted after the deadline to ascertain the advantages and
disadvantages of the policy on the businesses in the area.

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The Effect Of

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THE EFFECT OF REDESIGN NAIRA NOTES ON SMALL AND MEDIUM

SCALE BUSINESSES IN KANO SOUTH RURAL AREAS

The study arrived at the following conclusions:

4. There is uneasy access to banking services in the Kano South area

be invalidated or seized to be a legal tender beyond 31st January 2023.

disadvantages of the policy on the businesses in the area.

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