Assessment of Welfare Effects of Nigeria's Currency Redesign Policy on Households in the Federal Capital Territory

The currency redesign policy was implemented to combat counterfeiting, and promote a cashless economy. However, its impact on household welfare, a core objective of the policy, remains underexplored empirically, with extant studies focusing predominantly on macroeconomic indicators. This study empirically investigates the policy effects on households through income, consumption, savings, and access to financial services in the Federal Capital Territory (FCT). The survey-based descriptive research design was adopted and data were collected from 375 households across the six area councils of the FCT, selected from a population of 141,776 households, using the Taro Yamane formula, yielding a sample size of 399. A structured questionnaire with a reliability coefficient of 0.919 (Cronbach’s alpha) was used. The probit model adopted to test the hypotheses. Results revealed a positive effect of the currency redesign policy on all household welfare dimensions. Policy implementation led to a 42% increase in the likelihood of improved income stability, 125% increase in the probability of positive consumption changes, 38% increase in the likelihood of enhanced savings behavior, and 58% increase in the probability of improved access to financial services. The study concludes that Nigeria’s currency redesign policy had a significant positive impact on household welfare in the FCT by fostering financial inclusion, encouraging formal savings, and stabilizing consumption. However, the benefits were unevenly distributed, with higher-income households benefiting the most. This study recommends complementary policies, including targeted financial literacy programs and digital infrastructure expansion, to ensure that future monetary reforms are more inclusive and equitable.