Effect of Naira Redesign Policy on the Performance of SMEs in Yenagoa Metropolis, Bayelsa State

Abstract

The Naira redesign policy introduced by the Central Bank of Nigeria (CBN) in 2022 aimed to curb inflation, reduce counterfeiting, and promote a cashless economy. However, its abrupt implementation disrupted cash-dependent Small and Medium Enterprises (SMEs), particularly in Yenagoa, Bayelsa State, where digital payment infrastructure remains underdeveloped. While prior studies on currency reforms often focus on large economies or short-term effects, this study addresses a critical gap by examining the policy’s localized impact on SMEs in a region with low financial inclusion, providing context-specific insights absent in broader analyses. Using a cross- sectional design, data were collected from 360 SMEs via structured questionnaires, analyzed descriptively (mean, SD) and inferentially. Findings reveal statistically significant negative effects: reduced sales revenue (mean = 3.28), profitability decline (mean = 3.53), and cash flow disruptions (mean = 3.42), all scoring above the neutral midpoint (3.0) with narrow standard deviations (0.597–0.858), indicating high consensus. Challenges included limited access to new notes (mean = 3.25), operational cost increases (mean = 3.39), and customer distrust (mean = 3.48). Despite these setbacks, the policy spurred digital payment adoption (mean = 3.26), though SMEs faced implementation barriers like infrastructure gaps. The study underscores the need for phased monetary reforms complemented by targeted support for SMEs. Policy recommendations include: (1) CBN-led SME sensitization programs to improve policy awareness, (2) subsidized POS/Fintech partnerships to reduce digital transition costs, and (3) liquidity buffers for rural financial institutions to mitigate cash shortages. These measures, tied to regulatory action, could balance macroeconomic goals with SME resilience in cash-dependent regions.