IMPACT OF NAIRA REDESIGN ON ECONOMIC GROWTH OF NIGERIA

Abstract

This study examined the impact of the Naira redesign on economic growth in Nigeria. Using annual time series data from 1986 – 2024 and employing the Autoregressive Distributed Lag (ARDL) model, the study explored the impact of real gross domestic product (LRGDP), Naira redesign (NRD), exchange rate (LEXR), interest rate (INT), and inflation rate (INF). The ARDL Bounds Test provided no evidence of a long-run relationship among the variables, indicating that the Naira redesign policy does not significantly influence Nigeria’s economic growth in the long term. The short-run ARDL model revealed that the Naira redesign had no statistically significant effect on RGDP. However, the exchange rate, particularly with a one-period lag, significantly influenced short-run economic growth, while interest rates and inflation showed no significant short-run effects. The model’s diagnostic tests confirmed the absence of serial correlation and heteroskedasticity, supporting the reliability of the estimated results. The study also found that currency outside the banking system was achieved.  Leading to the conclusion that the Naira redesign policy had no
substantial short-run impact on economic growth in Nigeria. The study 
recommends that policymakers allow sufficient adjustment time for currency reforms and prioritise strategies that improve Nigeria’s financial infrastructure and monetary transmission effectiveness.