The Central Bank of Nigeria’s ‘Money and Credit’ data for March released showed a first decline in CoB this year as it has been on the rise since January 2024 after it fell by 4.37 percent to N3.28 trillion from N3.43 trillion in December 2023.
Again, Currency Outside Banks, (CoB), fell month-on month (MoM) by N27.5 billion or 0.55 percent to N3.6 trillion in April from N3.627 trillion in March 2024.
However, currency-in circulation (CIC) increased MoM by 1.5 percent to N3.92trillion in April from N3.86trillion in March.
The decline in (CoB) may be indicative of controversy around availability of cash in the banks with bank customers’ lamenting of limited cash withdrawals in banks and Automated Teller Machines, ATMs.
Shielding light on this, Segun Aremu, a Financial Expert said, “the currency outside the bank that fell month on month by the details presented , actually means that over time there have been growth in the financial inclusion and the informal sector of the economy has now begin to participate in banking financial processes.
“Hence, the money people keep in their stores and houses, boxes at home, they are now bringing them to the bank. This also may have been facilitated by the CBN’s regulations.
According to him, “currency in circulation, presupposes that there have been more spending in the economy especially by the government because of the hardship in the land.
“So, the government has to spend a lot. And when there is much more money in circulation and the government is spending so as to probably boost the people’s income, the resultant effect is inflation and that is why in every Economic Policy there is something called trade-offs, you cannot have much more in the circulation and at the same time have low inflation.
Aremu of the Peculiar innovative Consulting, said,
“When you have more money in circulation, it means that there has been increase in government spending, and that means that there will be inflation which means that cost of goods will go higher, as much money will keep chasing fewer goods and services.
According to him, the consequent effect is that, it will reduce people purchasing power and their earning power will also reduce. “Because inflation reduces people earning power and that is where are at the moment in Nigeria”, he explained.
The Government keeps spending and this spending does not address inflation. This situation also leads to others such as: capital flight and a situation where people see dollars as the jackpot to buy.
