CBN: Currency Outside Banks Outpace Nigeria’s Total Circulation By 93%
According to the Central Bank of Nigeria (CBN), the total amount of currency in circulation has reached N4.14 trillion, with N3.87 trillion outside the banking system. As a result, 93.34 percent of the nation’s currency is kept by individuals and businesses, while only 6.66 percent remains within the banking sector.
This trend highlights a persistent challenge for Nigeria’s formal banking system. Despite efforts to drive financial inclusion and promote cashless transactions, a significant portion of the country’s money supply remains outside regulated channels.
The gap between currency outside banks and the total currency in circulation suggests that Nigerians still heavily rely on cash for daily transactions, despite the rise of digital banking services. Also, the CBN data revealed that currency in circulation in Nigeria has added N1.48 trillion or 55.8 per cent Year-on-Year (YoY) to N4.14 trillion in August 2024 from N2.66 trillion in August 2023.
The reported N4.14 trillion in August 2024, about 2.25 per cent or N91.08 billion increase from N4.05 trillion reported by the CBN in July 2024. A breakdown of currency in circulation showed that January 2024 began with the currency in circulation at N3.65 trillion.
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This stable figure indicated a moderate start to the year, aligning with typical post-holiday economic activities. By the end of February 2024, the currency in circulation slightly increased to N3.69 trillion, a growth of N43 billion or 1.18 per cent from January.
March 2024 saw a more pronounced increase, with the currency in circulation rising to N3.87 trillion, a month-on-month increase of N175 billion or 4.76 per cent.
The upward trend continued in April, with the currency in circulation reaching N3.92 trillion. The N53 billion or 1.39 per cent increase from March 2024 suggests sustained economic activity and increased consumer spending during the Easter period.
May 2024 experienced a further increase to N3.97 trillion, up by N42 billion or 1.07 per cent from April 2024, while the most notable rise occurred in June 2024, with the currency in circulation peaking at N4.04 trillion, an increase of N84 billion or 2.11 per cent from May 2024, while it reached N4.05 trillion in July 2024.
When Mr. Olayemi Cardoso resumed office as CBN governor in September 2023, currency in circulation was at N2.76 trillion.
Speaking about money supply at the recently concluded MPC meeting Cardoso said: “Over N4 trillion in July, I know from my internal sources that another N1.4 trillion is likely to be delivered in another three months to aid that whole process of cash within the system and cash velocity. From our perspective, I think we are doing everything possible to ensure that there’s sufficient cash in the system, that’s that side of them, and there’s no excuse for not having sufficient cash in the system. Now it goes to the deployment of that cash.”