To Hail or Nail: Public Policy Analysis, Monitoring and Evaluation of the Central Bank of Nigeria Banknote Redesign Project


Background: why the currency overhaul

As a Policy, Project Management, Monitoring/Evaluation and Research Officer, I have been thinking about the need and rationale for the proposed CBN banknote redesign project, as there are other pressing national issues that funding such a project could solve and the mixed feelings that experts and the general public have expressed about the project. According to the Governor of the CBN (in this report ), “As of the end of September 2022, data available at the CBN indicates that 2.73 trillion naira out of the 3.23 trillion naira in circulation was outside commercial bank vaults across the country. country, and allegedly held by members of the public.

Obviously, the currency in circulation has more than doubled since 2015, from 1.46 tn in December 2015 to 3.23 tn in September 2022.” This, he said, cannot continue, because these huge banknotes are also held by terrorists and kidnappers on payment of a ransom.

Objective of the project

It could be said that the hypothesis/theory of change of the currency redesign project is as follows: if the banknotes of the target currency (N200, N500 and N1000) are changed, those who hold them enormously outside the commercial bank force them back to the banks; which will lead to mopping up and controlling crowd liquidity; while having a positive impact on lending, interest rates and the economy in general. As such, the objective of the policy/project according to the CBN Governor is: “To control the currency in circulation as well as to combat counterfeiting of currency and the payment of ransoms to kidnappers and terrorists.”

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Monitoring and evaluation

As a key point, even though the amount of money (which will be very huge or even inflated into billions!) that will be spent on the banknote redesign project has not been made public, it is good that the public knows how the outcome/impact of this public spending will be measured in accordance with the policy objective. Thus, outcome/impact or otherwise could be measured based on the following indicators and risk assumptions.

1. Project benchmarks (available)

Benchmarks of commercial bank liquidity, interest rates and lending rates

NS Percentage
1 Liquidity rate 20%, with 2.73 trillion naira (80%) of the 3.23 trillion naira in circulation outside commercial banks. And 1-month deposit rate of 5.58% in August 2022
2 Interest rate (monetary policy rate) 14.00% in August 2022
3 Maximum loan rate 28.30% in August 2022

(Data sources: Punch report cited above and CBN data in this report

2. Project result indicators

Based on the reference indicators above, the indicators of the result of the implementation of the draft policy will be:

(1) Significant increase in deposit/liquidity rates;

(2) Significant reduction in the interest rate;

(2) Significant increase in the maximum loan rate.

Note: This outcome data will be sourced/corroborated by CBN, Banks and relevant trade associations such as Chambers of Commerce, Manufacturers Association of Nigeria, etc. as borrowers.

By implication, in line with the project objective, other outcome indicators should include:

(1) Number of cases (increasing)/prosecutions against perpetrators of money laundering offenses by depositing cash;

(2) Significant reduction in cases of kidnapping/ransom payment;

(3) Significant reduction in reported cases of banknote counterfeiting.

Note: This outcome data will be sourced/corroborated by the CBN, Banks and the Economic and Financial Crimes Commission (EFCC).

3. Schedule of project results

Since the mob clearing (deposit) of old banknotes started in October 2022 and will end in January 2023, he expected the result of the above project to occur between October 2022 and January 2023 .

4. Project impact indicators

As I predicted in the project’s hypothesis/theory of change, commercial bank liquidity is expected to increase, which could lead to lower interest rates and higher lending rates and public and corporate borrowing. As such, the project impact indicators will include:

(1) Emergence of new businesses;

(2) Expansion of existing businesses;

(3) Reduced financial stress for members of the public.

Note: Data for impacts a and b will be collected/corroborated from chambers of commerce, trade associations, trade unions, trade commission, national statistics office, etc. While data for impact c will be collected from key informants.

5. Project Impact Timeline

The impact of the above project could begin to occur by June 2023, which is at least six months after the mass cleanup of deposits ends by January 2023.

6. Project risk

Beyond the expected positive result/impact of the project, there could also be a negative result/impact. For example, to avoid being caught in the act of money laundering, those who hold huge amounts of old notes can resort to converting them into dollars! If this happens, the price and scarcity of dollars will increase; which will affect those who need it for legitimate transactions. This will also affect the already declining value of the naira, which will further stress the economy.

Second, if the banknote redesign makes the terrorists/kidnapers money useless, they could up their game to make money, bounce back and stay afloat. As such, this has security implications, accordingly. As they aptly did, terrorists/kidnappers can also completely start ransoming abroad. This therefore goes against the project’s objective of preventing ransom payments.


In the spirit of value for money and among other pressing national issues that require funding – such as support for flood victims – the analysis I have presented here will allow the public to assess the results/l impact of the very large funds that will be spent on the banknote redesign project and the resulting public stress. With the assessment at the end, it will clearly be up to Nigerians to salute or nail the Federal Government and the CBN Governor, as the case may be.


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