Regional Analysis of the Currency Redesign Policy on Nigeria's Socioeconomic, Business and Financial Landscape

Abstract

This study investigates the heterogeneous regional effect of Nigeria’s 2022 currency redesign policy, given its uneven socioeconomic effect in emerging economies, focus on aggregate national impacts, and the neglect of critical regional disparities in financial infrastructure and informal sector reliance in prior studies. This study addresses this gap by assessing the regional effects of the policy on Nigeria’s socioeconomic welfare (income, consumption, employment), financial landscapes (inclusion, cashless adoption), and the mediating roles of financial infrastructure, digital readiness, education, and informality. Data sourced from six representative states across Nigeria’s geopolitical zones from 2021–2024 were analyzed using Difference-inDifferences and Moderated Mediation regression models to isolate causal policy effects and explain regional variation. Results revealed that the policy disproportionately reduced household welfare largely in cash-dependent regions by 28.7%. Conversely, it accelerated financial inclusion and digital adoption, particularly in digitally ready southern states. Financial infrastructure, education, and digital readiness positively mediated welfare outcomes, whereas high informality amplified negative effects. Macroeconomic indicators, such as fiscal transparency and regional GDP, contributed modestly to household welfare, whereas inflation exerted significant negative effects, revealing the limited transmission of macro gains to microlevel outcomes. The study revealed that while the policy partially achieved its objectives of promoting financial inclusion and monetary stability, regional heterogeneity critically shaped its effectiveness. The study recommends strengthening the financial infrastructure, promoting digital readiness, supporting informal sectors, and enhancing policy communication to ensure inclusive and equitable outcomes.