The international financial organization warned that the timing and short transition period of the Naira redesign could have a negative impact on small and medium-sized businesses and the impoverished in Nigeria.

This was disclosed by the Washington-based bank in a recent study titled “Nigeria Development Update.”

In an effort to reduce counterfeiting, abduction ransom payments, terrorism financing, and surplus cash in circulation, the Central Bank of Nigeria redesigned the old currency – N, 1000, N500, and N200 notes last month.

However, the report partly reads; “While periodic currency redesigns are normal internationally and the naira does appear to be due for it since naira notes have been redesigned for two decades, the timing of and short transition period for this demonetization may have negative impacts on economic activity, in particular for the poorest households.

“International experience suggests that rapid demonetizations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, potentially being particularly affected due to being liquidity-constrained and heavily reliant on day-to-day cash transactions.

“At present, households and firms already face elevated financial pressures from prolonged, high inflation, recently compounded by external food and fuel price shocks, and the severe floods, and phasing out existing naira notes over a short time period may add to their challenges.”

“As of September 27, 2022, N3.7 trillion had been repaid by the obligors and most of the loans are still under moratorium, especially manufacturing, which forms the largest pile of CBN’s portfolio – over 31 percent,” said CBN’s Director in charge of the Development Finance Department, Philip Yila Yusuf.

In view of this, the CBN warned all its debtors to immediately begin repayment of their loans, or else risk visitation by officials of the Economic and Financial Crimes Commission (EFCC) for forceful recovery.

According to Yila, the intervention funds had been slowed down in the bank’s efforts to rein in inflation.

He, however, warned that the bank is coming after debtors who will refuse to repay their loans when due.

He said the bank had collaborated with the EFCC to set up a desk with a view to recovering the loans.

“Any person who borrowed from us will pay back. We have also started recovering those loans from state governments. We have been doing a long workout program on them.

Any state government that has benefitted from our fund and is already in default, over a six-month period, we’re going to be debiting them at N50 million every month, and we have started that program,” he said.

Yila narrates that the loans were securitized and critical sectors such as agriculture, manufacturing, health, exports, and SMEs had benefitted from the intervention.