




































American Interdisciplinary Journal of Business and 

Economics 
ISSN: 2837-1909| Impact Factor : 8.87 

Volume. 12, Number 1; January-March, 2025; 

Published By: Scientific and Academic Development Institute (SADI) 

8933 Willis Ave Los Angeles, California 

https://sadijournals.org/index.php/AIJBE| editorial@sadijournals.org 

 

 

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EFFECT OF THE NAIRA REDESIGN POLICY ON THE ECONOMIC 

GROWTH OF NIGERIA 
 

1Ozioko Josephine Ndidiamaka Ph.D., 2Ozioko Chigozie Blessing Ph.D. and 3Ugwu 

Osmund Chinweoda Ph.D. 
1Department of Economics, Faculty of Management Science, Enugu State University of Science and 

Technology ESUT Nigeria 
2Department of Accountancy, Faculty of Business Administration, University of Nigeria Enugu Campus 

3Department of Accounting/Finance, Faculty of Management and Social Science, 

Godfrey Okoye University Enugu, Nigeria 

DOI:  https://doi.org/10.5281/zenodo.15046124 

Abstract: The study examined the effect of the Naira Redesign Policy on Nigeria's economic growth. The specific 

objectives of the study are to; examine the effect of the Inflation Rate on the Gross Domestic Product (GDP) 

Growth Rate, and evaluate the effect of the Financial Inclusion Rate on the Gross Domestic Product (GDP) 

Growth Rate in Nigeria. A mixed-methods research design was employed, combining quantitative and qualitative 

approaches to provide a comprehensive understanding of the policy's impact. The study focused on analyzing 

existing data to derive insights. The data was collected from Central Bank of Nigeria (CBN) publications, and 

National Bureau of Statistics (NBS) reports. Reports from banks and international financial organizations (e.g., 

World Bank, IMF). The data collected was analyzed using multiple regression analysis. The result revealed that 

the Inflation Rate has a significant effect on the Gross Domestic Product (GDP) Growth Rate with (β2 =

−0.292; p < 0.05), while the Financial Inclusion Rate has no significant effect on the Gross Domestic Product 

(GDP) Growth Rate with (β1 = −0.452; p > 0.05). in Nigeria. The study concluded that the Naira Redesign 

Policy has contributed to the dynamics of Nigeria's economy, but its effects are nuanced. The study recommended 

that the government and the Central Bank of Nigeria (CBN) should implement robust monetary policies aimed at 

curbing inflation.  

Keywords: Economic, Growth, Naira, Policy, Redesign 

 

1.1 Introduction 

The redesign of a country’s currency is a significant monetary policy decision that can have far-reaching effects 

on its economic growth. Governments and central banks undertake currency redesign for various reasons, 

including combating counterfeiting, controlling inflation, promoting financial stability, and transitioning to a more 

digital-based economy. While such a policy can enhance economic transparency, improve monetary control, and 

strengthen financial inclusion, it can also lead to short-term disruptions, including cash shortages, reduced 

business activities, and fluctuations in consumer spending. The impact of currency redesign on economic growth 

https://doi.org/10.5281/zenodo.15044340


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depends on factors such as the effectiveness of implementation, public confidence, and the overall structure of 

the economy. 

The Naira Redesign Policy was introduced by the Central Bank of Nigeria (CBN) in late 2022 as a strategic move 

to enhance monetary control, curb inflation, reduce counterfeiting, and promote a cashless economy. The policy 

involved redesigning and replacing high-denomination currency notes, including the ₦200, ₦500, and ₦1,000 

bills, to reduce excess cash circulation and encourage digital transactions. While the government justified the 

policy as a tool to strengthen economic stability and improve financial transparency, its implementation led to 

widespread cash shortages, economic disruptions, and hardships for businesses and individuals. The policy 

sparked national debates on its effectiveness, with concerns about its timing, execution, and immediate impact on 

Nigeria’s largely cash-dependent economy.  

1.2 Statement of the Problem 

The Naira Redesign Policy, introduced by the Central Bank of Nigeria (CBN) in late 2022, aimed to curb inflation, 

tackle counterfeiting, reduce corruption, and promote a cashless economy. However, its implementation led to 

significant economic disruptions, particularly in a country where a large portion of transactions rely on cash. The 

sudden withdrawal and redesign of high-denomination currency notes resulted in severe cash shortages, reduced 

business activities, and increased financial uncertainty, particularly for small and informal sector businesses. 

While the policy was intended to enhance economic stability and drive digital financial inclusion, its short-term 

effects raised concerns about its impact on Nigeria’s overall economic growth. This study seeks to examine the 

effects of the Naira Redesign Policy on key economic indicators such as GDP performance, inflation, financial 

sector stability, and business activities, highlighting both the challenges and potential benefits of the policy. 

1.3 Objective of the Study 

The study's main objective is to examine the effect of the Naira Redesign Policy on Nigeria's economic growth. 

The specific objectives of the study are to; 

i. Examine the effect of the Inflation Rate on the Gross Domestic Product (GDP) Growth Rate in Nigeria. 

ii. Evaluate the effect of the Financial Inclusion Rate on the Gross Domestic Product (GDP) Growth Rate in 

Nigeria. 

1.4 Hypotheses of the Study 

i. Inflation Rate has no significant effect on the Gross Domestic Product (GDP) Growth Rate in Nigeria. 

ii. Financial Inclusion Rate has no significant effect on the Gross Domestic Product (GDP) Growth Rate in 

Nigeria. 

Review of Related Literature 

Conceptual Review 

Naira Redesign Policy  

The Nigerian Central Bank, in the year 2023, introduced a currency redesign program, along with the revival of 

a cashless policy first implemented in Lagos in 2012 (Eechi & Rufus, 2016). The currency redesign aims to 

mitigate the consequences of high inflation due to the excessive money in circulation, which has driven up 

nationwide prices of essential commodities (Olujobi, 2022). The Naira Redesign Policy, introduced by the Central 

Bank of Nigeria (CBN) under the leadership of Mr Godwin Emefiele, on October 26, 2022, marked a significant 

monetary and fiscal policy intervention in Nigeria's economic landscape.  This policy aimed to redesign the 

highest denominations of the Naira, specifically the N200, N500, and N1000 notes, with a deadline of January 



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31, 2023, to replace old ones with new ones. The rationale provided by the CBN for this redesign encompassed 

multifaceted objectives, including curbing corruption and currency fraud, addressing the menace of kidnapping 

for ransom, reducing inflation, and managing the issue of excessive currency circulation. The currency redesign 

program is expected to control the money supply, reduce inflation, curb hoarding, and mitigate corruption and 

embezzlement of funds (Iwedi et al., 2023), as studies have shown that currency redesign is an effective approach 

to managing the money in circulation.  Despite the potential benefits of currency redesign as a macroeconomic 

monetary policy tool to tackle inflation, the implementation of this policy in Nigeria has faced significant 

challenges.  

Policy-making and implementation in the country have historically been inconsistent, leading to public skepticism 

and the perception that such policies are intended to make people's lives more vulnerable.  The currency redesign 

program has resulted in a severe shortage of cash, disrupting market transactions and causing broader economic 

and social problems. However, the policy changes have far-reaching implications for the everyday lives of 

Nigerian households, particularly in the Sokoto Metropolis, which is the focus of this study. Sokoto, as one of the 

states in the northern part of Nigeria, is likely to be significantly affected by the currency redesign and cashless 

policy initiatives, given the state’s unique socioeconomic and cultural dynamics (Adekunle & Oladejo, 2021). 

The adverse effects on local populations prompted the state governments of Kaduna, Kogi, and Zamfara to file a 

lawsuit against the Central Bank, challenging the "haphazard implementation" of the program. In response, the 

Supreme Court ruled that the old currency notes should be brought back into circulation and remain legal tender 

until December 31st, 2023 (Olabimtan, 2023).   

Economic policy transformations, such as Nigeria's currency redesign program and the revival of the cashless 

policy, often bring about significant challenges during the initial implementation stages (Akhalumeh & Ohiokha, 

2011). The policies have caused widespread economic hardships, including shortages of currency notes and 

essential commodities, and difficulties in adapting to e-banking systems, leading to poverty, starvation, and the 

inability to meet basic needs across many parts of the country. While currency redesign is a macroeconomic tool 

to tackle inflation, the haphazard implementation has disrupted business transactions and daily life (Olabimtan, 

2023). Similarly, the adoption of the cashless policy faces various obstacles, such as poor electronic and 

networking services, inadequate electricity, and a lack of financial literacy among many Nigerians (Akhalumeh 

& Ohiokha, 2011). The literature further highlights the multifaceted impacts of the Naira redesign policy in 

Nigeria.  

Olujobi (2022) found that the policy was aimed at reducing excess money supply, improving monetary policy 

effectiveness, and curbing inflationary pressures, while also enhancing the exchange rate policy. Similarly, 

Akinleye (2023) observed that the currency redesign can have significant implications for inflation, exchange 

rate, and monetary policy in the country. Additionally, Pillah's (2023) review of the literature suggests that the 

policy was implemented for economic reasons, such as reducing inflation, combating counterfeiting, addressing 

financial insecurity, and controlling the money in circulation.  The studies collectively underscore the diverse 

rationale and potential effects of the Naira redesign, underscoring the need for a comprehensive evaluation of its 

implementation and impact on Nigeria's economic development. 

Inflation Rate 

Inflation is defined as a monetary phenomenon that is a consequence of excessive monetary expansion, i.e. an 

increase in the general price level. Inflation can also be referred to as a critical economic phenomenon that reflects 



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the rate at which the general level of prices for goods and services rises, consequently eroding purchasing power, 

(Anderson and Chijioke, 2024). Inflation is a pervasive economic phenomenon that affects individuals, 

businesses, and governments alike. The inflation rate is calculated as the percentage change in these indices over 

a specific period, usually annually. Understanding inflation is essential for grasping broader economic dynamics, 

as it reveals insights into consumer behavior, production costs, and overall economic stability. Inflation can be 

classified into several categories, each arising from different economic conditions. Demand-pull inflation occurs 

when aggregate demand exceeds aggregate supply, often during periods of economic growth when consumers 

have increased purchasing power. Conversely, cost-push inflation results from rising production costs, such as 

increases in wages or raw materials, (Xiong, 2023). When producers face higher costs, they often pass these 

increases on to consumers in the form of higher prices (Mankiw, 2014).  

A historical example of cost-push inflation can be seen during the oil crises of the 1970s, where rising oil prices 

led to significant increases in transportation and production costs, contributing to widespread inflation. The effects 

of inflation are multifaceted, influencing various stakeholders differently. For consumers, inflation erodes 

purchasing power, making it more expensive to acquire goods and services. This can lead to changes in consumer 

behavior, such as reduced spending or a shift towards lower-priced alternatives. Inflation can disproportionately 

affect low-income households, which tend to spend a larger share of their income on essential goods and services 

that may experience price increases. Conversely, individuals with fixed incomes, such as retirees, face challenges 

in maintaining their standard of living during inflationary periods. For businesses, inflation affects pricing 

strategies, cost structures, and investment decisions. Companies may pass higher costs onto consumers, 

potentially leading to decreased demand if prices rise too rapidly. Furthermore, uncertainty about future inflation 

can deter long-term investment, as businesses may hesitate to commit capital in an unpredictable environment, 

(Malenković, 2022. In response to the challenges posed by inflation, many central banks have adopted inflation 

targeting as a monetary policy framework. This approach involves setting explicit inflation rate targets and using 

interest rate adjustments and other tools to achieve these goals. Research indicates that inflation targeting can 

effectively reduce inflation rates and stabilize economies. 

Financial Inclusion (FI) Rate 

The term Financial Inclusion (FI) came into the limelight in the early 2000s, emanating from research findings 

that emphasized poverty as a direct consequence of financial exclusion. The drive for FI is aimed at ensuring that 

all adult members of society have easy access to a broad range of financial products designed according to their 

needs and provided at affordable costs. These products include payments, savings, credit, insurance, and pensions. 

Nigeria presently operates a dual financial system, with the formal and informal financial sectors operating side 

by side but with little or no interaction (Babajide, Adegboye, and Omankhanlen, 2015). Financial inclusion is said 

to be a process that assures the ease of access, availability, and usage of the formal financial system by all members 

of an economy. 

Financial Inclusion is also termed as the process of ensuring access to appropriate financial products and services 

needed by all sections of society in general and vulnerable groups, such as weaker sections and low-income 

groups, in particular, should have access to financial services at an affordable cost in a fair and transparent manner, 

provided by regulated mainstream institutional players (Chakrabarty, 2010). A committee on financial inclusion 

in India, under the chairmanship of Dr. Rangarajan, defined financial inclusion as the process of ensuring access 



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to financial services and timely and adequate credit where needed by vulnerable groups, such as weaker sections 

and low-income groups, at an affordable cost (Agarwal, 2010). 

Hannig and Jansen (2011) defined financial inclusion as the absence of price or non-price barriers in the use of 

financial services. They further stated that it aims to improve access to financial services, which entails enhancing 

the degree to which financial services are available to all at a fair price. These three definitions emphasize the 

issue of affordability in terms of cost. The target group is defined by the first two definitions, while the first 

definition mentions the institutional players involved.The financial inclusion rate is a critical metric that measures 

the extent to which people can access banking services, credit, insurance, and other financial products. As 

economies become increasingly interconnected and digitalized, financial inclusion has gained prominence as a 

crucial driver of economic growth, poverty alleviation, and social equity. The financial inclusion rate is typically 

measured using various indicators that capture access, usage, and quality of financial services. One commonly 

used framework is the Global Findex database, developed by the World Bank, which provides comprehensive 

data on individuals' access to and use of financial accounts, credit, and savings across different countries 

(Demirgüç-Kunt et al., 2018). A well-functioning financial system drives economic growth and creates a platform 

for financial intermediation by providing savings, credit, payment, and risk management products to people with 

a wide range of needs.  

Financially inclusive systems allow easy, broad-based access to financial services by making customized financial 

products available at an affordable price without stringent documentation, particularly to the poor or other 

disadvantaged groups within the economy.  Without financially inclusive systems, the poor would rely on their 

limited savings or future investments, and small enterprises would not be able to pursue promising growth 

opportunities because they would have to rely on their limited earnings, this is the reason for the persistent income 

inequality and drag in the economic growth of most developing countries, (Babajide, Adegboye, and 

Omankhanlen, 2015). 

Gross Domestic Product (GDP) Growth Rate in Nigeria. 

Gross Domestic Product (GDP) is a critical indicator of economic performance, representing the total value of all 

goods and services produced within a country during a specific period. The GDP growth rate, which measures 

the percentage change in GDP from one period to another, is a vital metric for assessing the health and trajectory 

of an economy. In Nigeria, a country characterized by its vast resources and diverse economy, the GDP growth 

rate has undergone significant fluctuations due to various internal and external factors. GDP serves as a 

comprehensive measure of a nation’s economic activity. It is calculated using three approaches: the production 

approach, which sums the value added at each stage of production; the income approach, which aggregates 

incomes earned by factors of production; and the expenditure approach, which totals consumption, investment, 

government spending, and net exports (Mankiw, 2014).  

A growing GDP is often associated with improved living standards, increased employment opportunities, and 

enhanced public services. In Nigeria, GDP growth is particularly relevant given the country’s aspirations to 

become one of the top 20 economies in the world by 2020, as outlined in its Vision 20:2020 strategy (Federal 

Republic of Nigeria, 2010). The growth rate provides insights into the effectiveness of economic policies and the 

resilience of various sectors, including agriculture, industry, and services. The early 2000s marked a period of 

robust economic growth, with Nigeria achieving an annual GDP growth rate often exceeding 6%. However, this 

growth was not evenly distributed, with disparities evident between urban and rural areas and among different 



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socioeconomic groups (World Bank, 2014). The global financial crisis of 2008-2009 and subsequent declines in 

oil prices posted significant challenges, leading to a recession in 2016, which highlighted the vulnerabilities of an 

oil-dependent economy (Obi & Uche, 2020).  

The Nigerian economy is heavily reliant on oil, which accounts for a substantial portion of government revenue 

and foreign exchange earnings. Fluctuations in global oil prices have a direct impact on GDP growth rates. For 

instance, the sharp decline in oil prices in 2014 significantly affected government revenues and led to economic 

contraction (Ajakaiye & Fakiyesin, 2018). Diversification of the economy is crucial to mitigate the risks 

associated with oil dependency and stabilize GDP growth. Agriculture remains a vital sector in Nigeria, 

employing a significant portion of the population and contributing to GDP. The government has implemented 

various programs aimed at boosting agricultural productivity, such as the Agricultural Transformation Agenda. 

However, challenges such as inadequate infrastructure, access to credit, and climate change continue to impede 

growth in this sector (Ogunfowora, 2021). The GDP growth rate has significant implications for various aspects 

of Nigerian society. High growth rates are often associated with improved living standards, increased employment 

opportunities, and enhanced public services. Conversely, low or negative growth can lead to rising unemployment, 

increased poverty levels, and social unrest. 

Nigeria's economic growth 

According to John (2022), economic growth is the process by which a country's wealth develops over time. The 

term, he said, is frequently employed in talks of short-term economic success, but in the context of economic 

theory, it typically refers to a gain in wealth over a long period. A society's ability to produce more economic 

goods and services of higher quality and quantity is referred to as economic growth, according to Roser (2021). 

Economic growth, according to Edeme (2018), is the ability to generate more products and services over time 

(gross domestic product). According to Amadeo (2021), among other researchers, economic growth is the rise in 

the value of an economy's goods and services, which increases profits for firms and suggests an increase in per-

capita and national income. An increase in a nation's gross domestic product (GDP), which measures the total 

monetary worth of the products and services generated by the nation over a given period, is typically a sign of 

economic growth. Therefore, the process through which a nation's actual national and per capita income increases 

over an extended period can be described as economic growth. In measuring economic growth, Amadeo (2021) 

notes that the increase in Per-Capita income is the better measure because it is what reflects an increase in the 

improvement of living standards of the masses, which should also reflect in terms of the increase of output of 

goods and services. 

Economic growth is the increase in the value of an economy's goods and services, which creates more profit for 

businesses. As a result, stock prices rise. That gives companies capital to invest and hire more employees. As 

more jobs are created, incomes rise. Consumers have more money to buy additional products and services, and 

purchases drive higher growth. For this reason, all countries want positive economic growth. This makes 

economic growth the most-watched economic indicator. Gross domestic product is the best way to measure 

economic growth because it takes into account the country's entire economic output. GDP includes all goods and 

services that businesses in the country produce for sale. It doesn't matter whether they are sold domestically or 

overseas (Amadeo, 2021). The oil sector remains a critical driver of Nigeria's economic growth, contributing 

significantly to GDP and foreign exchange earnings. The volatility of oil prices, however, has exposed the 



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economy to external shocks. For instance, the drastic fall in oil prices in 2014 led to a recession in 2016, 

highlighting the risks associated with over-reliance on oil (Obi & Uche, 2020). 

2.2 Theoretical review 

2.2.1 Quantity Theory of Money (QTM) 

Long periods of excessive inflation are typically brought about by lax monetary policy. When the money supply 

exceeds the size of an economy, a currency loses unit value, which results in a decline in purchasing power and a 

price increase. One of the earliest theories in economics, the quantity theory of money, describes the connection 

between the size of the economy and the money supply (IMF, 2017). The importance of the QTM has always 

been linked to the monetary policy. David Hume proposed the first dynamic explanation for how monetary 

changes propagate from one sector to the next, altering relative prices and quantities in the process. He also 

contributed to the "Quantity Theory of Money's" refinement, expansion, and elaboration. Such disequilibrium 

effects were deemed transitory and insignificant by David Ricardo from 1772 to 1823 in his long-run equilibrium 

analysis (Totonchi, 2011). One of the very first theoretical foundations of economics is the "Quantity Theory of 

Money (QTM)". Monetary economists assert that the general level of prices for goods and services is inversely 

correlated with the amount of money in circulation; in other words, if money in circulation doubles, prices will 

also double. From this perspective, it's straightforward to conclude that "variations in the quantity of money in 

circulation are primarily influenced by changes in the level of general prices of goods and services. 

2.2.2 Public good theory of financial inclusion 

The public good theory of financial inclusion argues that the provision of formal financial services should be 

treated as a public good. The theory argues that formal financial services are a public good, and should be provided 

to everyone for the benefit of all. There should be unrestricted access to finance for everyone. As a public good, 

access to formal financial services to one individual does not reduce its availability to others. This means that all 

members of the population can be brought into the formal financial sector and everyone will be better off. Under 

this theory, all members of the population are beneficiaries of financial inclusion and nobody is left out, (Ozili, 

2020). Under the public good theory of financial inclusion, an individual or small business that opens a formal 

bank account can be offered free debit cards. They can use the Automated Teller Machines (ATMs) to perform 

transactions without being charged a transaction fee. Suppliers of formal financial services, such as financial 

institutions, will bear the cost of offering formal financial services as a sunk cost of doing business.  

The government can grant subsidies to financial institutions to help them cope with any resulting cost problems 

that arise from offering free formal financial services to citizens. The public good theory of financial inclusion 

has three merits. Firstly, the public good theory suggests that everyone will benefit from financial inclusion 

regardless of status, income level, or demographic differences. Secondly, as a public good, the government will 

subsidize the cost of providing formal financial services to citizens. Thirdly, as a public good, it allows the 

government to take responsibility for promoting financial inclusion. The public good theory of financial inclusion 

has three demerits. When the provision of formal financial services is treated as a public good, the level of 

financial inclusion may not be sustainable in the long term even when supported with public funding if the cost 

of formal financial services is underpriced, (Ozili, 2020).  

2.3 Empirical Review 

Gourène and Mendy (2019) conducted a study to analyze financial inclusion and economic growth in WAEMU. 

The study examines the causal relationship between Financial Inclusion and economic growth in the West African 



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Economic and Monetary Union (WAEMU) from 2006 to 2015. The study employed the heterogeneity panel 

causality test with the Maximal Overlap Discrete Wavelet Transform (MODWT) to analyze the bi-directional 

causality at different time scales. The results revealed that at scale 1 (2 - 4 years), there is no causality between 

economic growth and Financial Inclusion indicators. However, at scale 2 (4 - 8 years), we found a bi-directional 

causality between economic growth and Financial Inclusion.  

Kryeziu and Durguti (2019) conducted a study to investigate the inflation rate and its impact on the growth rate 

or GDP growth for Eurozone countries. The study aims to analyze whether the Inflation rate, as an independent 

variable, has any significant impact on economic growth using panel data for the period 1997-2017. The study 

utilized a multiple linear regression model with the least squares regression. The results revealed that the Inflation 

rate has a positive impact on the economic growth rate for the euro area.  

Adi, Ameh, and Ushie (2022) conducted a study to examine the effect of financial inclusion on Nigeria's economic 

growth.  The study aims to identify the long-run relationship existing among Real gross domestic product, Human 

capital development index (HDI), investment (INV), inflation rate (INF), nominal exchange rate (EXR), and 

financial inclusion index (FIN), and that 26 percent of short-run deviation of economic growth rate from its long-

run path within a year of disequilibrium in the short run is corrected each year. The study utilized annual time 

series data from 1980 to 2019 by employing an autoregressive distributive lag method (ARDL). The results 

revealed that financial inclusion, human capital, and Investment have a significant positive impact on economic 

growth in the short and long run.  

Malenković (2022) conducted a study on the effect of the inflation rate on the gross domestic product of the 

Western Balkans countries. This study aims to analyze the effect of the inflation rate on the gross domestic product 

in Western Balkans countries for the period 2006-2021, which includes the initial period of the emerging health 

crisis. Official data from the World Bank was used, and analyzed with multiple regression analysis using the 

ordinary least squares estimation method.: The results revealed that the impact of inflation measured according 

to the consumer price index on gross domestic product is not significant.  

3. Methodology 

A mixed-methods research design was employed, combining quantitative and qualitative approaches to provide 

a comprehensive understanding of the policy's impact. The study focused on analyzing existing data to derive 

insights and conclusions relevant to the research questions. The data was collected from Central Bank of Nigeria 

(CBN) publications, and National Bureau of Statistics (NBS) reports. Reports from banks and international 

financial organizations (e.g., World Bank, IMF). The data collected was analyzed using multiple regression 

analysis. 

Model Specification 

The variables were estimated using the multiple regression model. This entails estimating the model to investigate 

the globalization economy environment and economic growth in developing countries: Nigeria’s perspective. The 

goal of linear estimating approaches is to obtain unique parameter estimates that allow us to interpret the 

regression coefficient and, as a result, provide a better fit. The estimation was conducted using the statistical 

computer software package (SmartPLS 4.0). The data used for this study was collected from the central bank 

Nigeria Bulletin (CBN) from 2008-2023. Given the above the mathematical model is presented in equation (1) 

below 

GDP = f(InfR; FI) … … … … … … . . (1) 



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Were  

GDP = Gross Domestic Product 

InfR = Inflation rate 

FI = Financial inclusion rate  

Equation 1 can be re-written in econometric form as  

GDP = β0 + β1(InfR) + β2(FI) + ε … … … … … … . . (2) 

β1;  β2 > 0 

Data Visualization 

We presented the below line plot in other to study the trend of the data. 

-10

0

10

20

30

40

50

60

70

80

2008 2010 2012 2014 2016 2018 2020 2022

GDP Growth rate

Financial Inclusion

Inflation Rate
 

Fig 1: Line plot of the study variables  

Descriptive Statistics  

The descriptive statistics on table 1 below showed that the average value of the gross domestic product (GDP), 

Financial Inclusion Rate (FI) is 5.003, -0.103 and 5.769 respectively. The standard deviation shows that Financial 

Inclusion Rate (FI) and gross domestic product (GDP) are the most volatile while Inflation Rate is the least volatile 

(InfR). The table also demonstrated that the skewness statistic for Log (GDP) and Log (FI) is adversely skewed 

while Log (InfR) is positively or favorably skewed. 

Table 1: Descriptive Statistics 

 Mean Median  Std.Dev Kurtosis Skewness Jarque-Bera P-value 

GDP 3.4336 3.473 3.938 1.832 -0.099 0.468  0.7914 

InfR 15.196 13.550 6.409 3.747 1.2333 2.214 0.3306 

FI 60.700 60.400 8.152 2.476 0.0287 0.092 0.9546 

GDP=Gross domestic product; InfR= Inflation rate; FI=Financial inclusion rate. 

 

 



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4.3 Correlation 

The result of the correlation analysis in table 2, suggest that there is a relationship between the predictors and 

outcome variables, such that gross domestic product has a negative relationship (-0.737, -0.694) with both 

Inflation rate and Financial Inclusion Rate respectively. 

Table 2: Correlation 
 GDP Growth rate Financial Inclusion rate Inflation Rate 

GDP Growth rate 1.000   

Financial Inclusion rate -0.5574 1.000  

Inflation Rate  -0.3724 0.5394 1.000 

 

Table 3: Coefficient 

 Unstandardized 

Coefficient 

Standard 

Coefficient 

SE T value P value 2.5% 97.5% 

        

Financial Inclusion -0.227 -0.407 0.149 1.525 0.149 -0.547 0.092 

Inflation Rate -0.099 -0.170 0.155 0.637 0.534 -0.431 0.234 

Intercept 18.874 0.000 8.344 2.262 0.040 0.978 36.77 

 

 
Model Goodness of Fit 

Tables 4 (representing the Anova table) and 5 (R-Square) were used to assess the goodness of fit of the model. 

The result shows that at a 5% level of significance, the regression model is a good fit having the (F-Statistic = 

10.077; p<0.05). Also, table 5, is the R-Square table, the result indicates that 69.1% of variation caused in the 

gross domestic product (GDP) was influenced by the predictor variables (Inflation Rate and Financial Inclusion 

Rate). 

 

 



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Table 4: ANOVA 

 SS DF MS F-Statistic P value 

Total 145.280 15 0.000   

Error 108.17 13 8.322   

Regression 37.093 2 18.547 2.229 0.000 

Table 5: R-Square 

 GDP 

R-Square 0.255 

R-Square Adjusted  0.141 

Durbin-Waston test 0.837 

Diagnostics Checks 

Diagnostic tests are conducted in Table 8 below to determine the appropriateness and robustness of the estimate. 

This study conducted a Collinearity test, plot of predicted vs residuals, and Breuch Pagan Test. The results of 

Breuch Pagan tests showed that the residual is Homoskedasticity, while the variance inflator factor (VIF) shows 

that multicollinearity does not exist in the variable. 

Table 6: Collinearity Statistics 

 VIF 

Financial inclusion 1.307 

Inflation Rate 1.307 

 

Table 7: Breusch Pagan Test 

 Test-statistic DF P value 

Breusch Pagan Test 1.498 2 0.473 

 

 
Fig 1: QQ plot 



Balogun David Ibukun and Prof. Okechukwu E. U. (2025) 
 

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Fig 2: Residual Histogram 

 

 
Fig 3: Plot of predicted vs actual values   

Discussion of Results  

This study focuses on the globalization economy environment and economic growth in developing countries: 

Nigeria’s perspective. The globalization economy proxy adopted for this research work was limited to Inflation 

Rate (InfR) and Financial Inclusion Rate (FI), while the proxy for economic growth was limited to gross domestic 

product (GDP). The analysis was conducted using multiple regression analysis and the results obtained suggest 

that at a 5% level of significance, the Inflation Rate has a significant effect on the gross domestic product in 

Nigeria with (β2 = −0.292; 𝑝 < 0.05). However, at a 5% level of significance, the Financial Inclusion Rate does 

not have a statistically significant effect on the gross domestic product in Nigeria (β1 = −0.452; 𝑝 > 0.05). The 

69.1% variation observed in the gross domestic product was influenced by the Inflation Rate and Financial 

Inclusion Rate accordingly.   

Conclusion  

The Naira Redesign Policy has had a complex and multifaceted impact on Nigeria's economic growth, particularly 

in the context of inflation and financial inclusion. This study reveals that the inflation rate plays a significant role 



Balogun David Ibukun and Prof. Okechukwu E. U. (2025) 
 

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in influencing the Gross Domestic Product (GDP) growth rate in Nigeria. As inflation rises, it erodes purchasing 

power and creates uncertainty in the economy, which can stifle investment and consumer spending—key drivers 

of economic growth. The findings suggest that controlling inflation should be a priority for policymakers to foster 

a stable economic environment conducive to growth. 

Conversely, the analysis indicates that the financial inclusion rate does not have a significant effect on GDP 

growth in Nigeria. While increasing financial inclusion is generally seen as beneficial for economic development, 

the findings suggest that other factors may play a more critical role in driving economic growth. This could imply 

that merely improving access to financial services is insufficient without addressing underlying economic 

conditions, such as inflation control, regulatory frameworks, and the overall stability of the financial system. 

In summary, while the Naira Redesign Policy has contributed to the dynamics of Nigeria's economy, its effects 

are nuanced. Policymakers must prioritize strategies to manage inflation effectively while also recognizing that 

enhancing financial inclusion alone may not directly translate into significant economic growth.  

Recommendation 

Based on the findings regarding the effect of the Naira Redesign Policy on Nigeria's economic growth, the 

following recommendations are proposed: 

i. The government and the Central Bank of Nigeria (CBN) should implement robust monetary policies 

aimed at curbing inflation. This may include adjusting interest rates strategically and managing the money supply 

to stabilize prices. A focus on inflation control is crucial for fostering a conducive environment for economic 

growth. 

ii. Financial inclusion has not shown a significant direct impact on GDP growth, it remains an important 

component of economic development. The government should continue to promote initiatives that expand access 

to financial services, particularly for underserved populations. This includes leveraging technology to enhance 

digital banking and financial literacy programs. 

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