The Nigerian government is reportedly considering revisiting the Naira redenomination policy as a measure to address the persistent slide of the national currency against major international currencies like the US Dollar, Pound Sterling, and Euro. This initiative is being explored by the economic team of the Bola Tinubu administration as part of efforts to stabilize the Naira’s value. The option of redenominating the currency, which involves changing the nominal value of the currency by replacing old currency units with new ones at a different ratio, is being discussed alongside other alternatives.
The Naira has been facing a significant decline in value against major foreign currencies, raising concerns about its impact on the economy. In the past month, the Naira has experienced a particularly steep fall against the US Dollar and other international currencies. The economic team of the administration reportedly sees redenomination as a potential solution to address the currency’s depreciation and attract investor confidence.
However, experts and economists have expressed mixed opinions about the effectiveness of currency redenomination as a solution to the currency slide. Some experts argue that the timing might not be right and that other fundamental economic issues need to be addressed before considering such a significant policy change. Critics also point to the experience of other countries, like Ghana, where redenomination did not lead to the desired outcomes and even exacerbated currency-related challenges.
Experts suggest that instead of focusing solely on currency redenomination, the government should consider a comprehensive approach that includes improving the ease of doing business, boosting government revenues, promoting policy implementation, and addressing specific sectors such as manufacturing, power, SMEs, and services. While the idea of revisiting the Naira redenomination policy is on the table, discussions about its potential implementation and impact are ongoing within the government.
