This was disclosed by the Washington-based bank in a new study titled "Nigeria Development Update."
This occurred amidst the conflicting reactions to the freshly redesigned banknotes.
The Central Bank of Nigeria revealed new N1,000, N500, and N200 banknotes this month as part of efforts to eliminate surplus currency in circulation and prevent, among other things, ransom payments for kidnapping, terrorism financing, and counterfeiting.
In its analysis, the World Bank stated that the new policy will significantly impact small firms, particularly those that perform daily cash transactions.
The report stated, "While periodic currency redesigns are common internationally and the naira appears to be due for one given that naira notes have not been redesigned for two decades, the timing and short transition period for this demonetization may have negative effects on economic activity, especially 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 disproportionately impacted as a result of their liquidity constraints and reliance on cash transactions for day-to-day transactions."
Existing naira notes may be phased out over a short period of time, which may exacerbate the difficulties already faced by households and businesses due to protracted, high inflation, recent external food and fuel price shocks, and severe floods.

Dr. Uju Ogunbunka, president of the Bank Customers Association of Nigeria, stated that the intentions of the cashless policy were comprehensible, but that the policy's implementation and timing were flawed.
He stated, "From the perspective of cashless policy, we should value the government's efforts to reduce the use of cash for transactions as much as possible, especially now that they are revamping the currency." The government also wants to encourage the usage of online banking, which is beneficial to our economy. Unfortunately, so many complaints have been made concerning unsuccessful transactions.
"Almost every week there are complaints at the banking hall. People will be heard complaining about failed transfer attempts. "Have we established sufficient structure to handle some of these issues?" Yes, we are making progress, but we need provide sufficient space and time for some of these things to play out as opposed to short-circuiting the system.
In addition, Dr. Adebayo Adams, the Lagos State Chairman of the Nigerian Association of Small and Medium Enterprises, stated that the policy will negatively impact enterprises and MSMEs.
