Cash held outside Nigeria’s banking system rose to ₦4.92 trillion, accounting for 89.1% of the country’s total currency in circulation, underscoring the economy’s continued dependence on physical cash despite sustained efforts by the Central Bank of Nigeria (CBN) to deepen electronic payments and formal financial intermediation.
CBN data showed total currency in circulation reached ₦5.52 trillion, with only about ₦600 billion, or 10.9%, remaining within the banking sector.
The figures suggest that a significant proportion of cash continues to be held by households, businesses and participants in the informal economy rather than deposited in commercial banks.
Although the share of currency outside banks eased from previous highs above 90%, the latest data points to the persistence of cash-intensive transactions even as digital payment adoption accelerates across Africa’s largest economy.
The trend presents a challenge for policymakers seeking to improve monetary policy transmission, strengthen financial inclusion and reduce the costs associated with cash handling.
High volumes of currency outside the banking system can also constrain banks’ deposit mobilisation and liquidity while limiting the effectiveness of monetary tightening measures.
Nigeria has witnessed rapid growth in digital payment channels, driven by fintech companies, mobile banking and point-of-sale (PoS) networks.
However, cash remains the dominant medium of exchange across much of the informal sector, which contributes a substantial share of the country’s economic activity.
The latest figures come as the CBN continues reforms aimed at improving payment efficiency and encouraging greater use of formal financial channels, following the disruptions caused by the 2023 currency redesign and cash shortage.
