On October 26, 2022, the Central Bank of Nigeria announced the Naira redesign policy to promote financial inclusion and create the long-desired cashless economy. The impact of this policy goes far beyond just a new look; it has political implications that can reshape the entire economy.
The redesign came when economic activities were tense because of the overly stretched period of fuel scarcity, high exchange rate volatility, higher inflation rates, and generally increased poverty rates arising from a drop in the standard of living of many.
According to the World Bank population estimates released on December 23, 2022, Nigeria has the largest female population in Africa and the 7th in the world, with an estimated 108 million women and girls, which make up 49.9% of its people.
While this policy might pose numerous benefits for the country, it is crucial to look keenly into its potential aftermath on women. This article will assess the positive and negative effects of the Naira redesign on women in the formal and informal sectors in Nigeria.
The Naira Redesign Policy
Since 1973, the evolution of the Naira and Kobo has taken different forms, so a currency redesign is not a new development. In line with international standards, a currency redesign should occur within 5-8 years, hence, the apex bank of Nigeria’s announcement to redesign the N1000, N500, and N200 notes on October 26, 2022, was well within regulations. However, since introducing the redesigned notes to the public on December 15, 2022, much has happened to the Nigerian economy, and the women were not left out.
In a country where cash continues to be the most popular form of payment, Godwin Emefele, Governor, Central Bank of Nigeria, in his remarks on the new Naira notes, stated that this is an effort to boost the adoption and circulation of new notes in the economy and reduce hoarding, counterfeit notes production, curb insecurity caused by banditry and kidnapping and promote stability and a cashless society.
However, emphasis should be placed on the informal sector to boost the adoption of a cashless society. To do so, we must understand the formal and informal sectors and their influence on the average Nigerian woman. Most women in this sector run small businesses that rely on cash for day-to-day operations. Promoting financial inclusion by increasing access to banking services, it is anticipated that more women will open bank accounts, allowing them greater control over their finances. In addition, this could provide increased security in handling daily transactions and give women greater flexibility in receiving or making payments.
Overview of Women in the Formal and Informal Sector
According to the World Bank Report 2022, in recent years, there has been an increase in the number of women in the formal sector, with the current level of participation at 6.9%. This growth, although small, can be attributed to increased access to education, resources, and improved job opportunities.
Meanwhile, 82.1% of women in Nigeria actively participate in the informal sector, such as agriculture and small businesses. The informal economy is an essential source of livelihood for many, and it provides job security for women who may not have opportunities to play in the formal sector. This population is often overlooked due to poor access to financial services and banking institutions.
Exploring the Number of Women with Bank Accounts
You may wonder if the Naira redesign will likely impact the number of women with bank accounts. Nigeria’s female workforce has low financial inclusion levels—only one in three adult women own a bank account, according to the National Bureau of Statistics—making it impossible for them to participate in transactions other than cash-based transactions. Moreover, according to the most recent World Bank data, women account for at least 49% of Nigeria’s workforce. Therefore, understanding how the Naira redesign policy affects such a sizable portion of Nigeria’s workforce is essential for understanding the impact of the policy on women.
According to the Multiple Indicator Cluster Survey by the National Bureau of Statistics, only 35.4% of adult women own bank accounts nationwide. This percentage can only be expected to rise with this new policy. In rural areas, the rates are much lower at 17.4%. From market information, the number of banked women was previously low due to various factors, such as poverty, low awareness of financial packages, lack of access to financial services or zero savings, low level of literacy, and poor socio-economic conditions.
The Naira redesign policy is set to increase financial inclusion by expanding the banking opportunities for the public and providing access to more financial services for citizens. According to the CBN, this is expected to lead to more women opening up bank accounts and accessing a range of products from banks and other institutions that allow them to take advantage of services such as online banking, debit cards, and loans. It also enables them to securely store their income and keep track of their finances.
However, many women in the informal sector still cannot take advantage of these services because they need cash to run their businesses.
The Impact of the Naira Redesign Policy on Women
The deadline for the old naira deposit was initially fixed for January 31, 2023, but was extended to February 10, 2023. Implementing the policy, which has been described as rushed due to the short period allowed to return the old naira notes, resulted in many issues that have critically impacted women’s lives in the country. One of the outcomes was a severe shortage of cash in the country, which is at an all-time high, and online banking services are slowing down because of daily transaction pressure from the populace.
To meet these deadlines, women have had to leave their daily activities—business and household- to visit banking halls to deposit old naira notes, withdraw, or complain about failed online transactions. Their daily activities are obstructed by the never-ending queues at banking halls, losing reasonable time they should spend on their businesses.
This policy has also significantly affected those who rely on cash to run their businesses. As many women are yet to be connected to the banking system and do not have bank accounts, they need access to physical cash to pay for stock and services. With limited cash in supply, achieving this has become difficult, leading to profit margin loss and money devaluation as money agents exploit them. This policy has also significantly affected those who rely on cash to run their businesses.
While the policy intends to digitize transactions in the country, it also has an unintended consequence: limiting women’s access to health packages and toiletries. Many women rely on affordable packages that include pads and other hygiene products. These products are often difficult to come by due to their cost or lack of availability in some rural regions. As such, they are mainly traded for cash, and the Naira redesign could make these items harder for women living in poverty-stricken areas to access. Already, such women face limited resources, especially in healthcare services; added to this, the unavailability of these essential products will increase poor hygiene practices, leading to further health complications for them.
As cash is king in these markets, it has made buying basic items and getting essential services more difficult. It has heightened the cost of such transactions, logistics, and commutes, not forgetting the fuel scarcity lurking around. One wonders if this policy is set to achieve its objectives or exacerbate the impacts highlighted earlier.
The Naira redesign has had a far-reaching impact on women in Nigeria. Although the number of women with a bank account will increase, many women in the informal sector depend on cash availability to run their businesses. The prevailing circumstances suggest that the CBN Naira redesign policy, especially its implementation strategy, may have failed to preempt the impact on the welfare and livelihood of women in the country, especially women in rural communities. This can further their disadvantages. With all these issues women have faced in the past month, and the constraint in accessing financial service providers, trust in the financial sector might dwindle, consequently failing to achieve the goal of this policy.
Therefore, policymakers and financial institutions should consider the impact of their decisions on women’s welfare in Nigeria and ensure that their decisions promote greater financial inclusion and that women are aware of and have access to the financial services they need. This matter needs policymakers’ attention if Nigeria is serious about empowering women in the informal sector and not leaving them behind economically by such currency reform’s consequences.