Currency outside banks hit a new high of N4.65 trillion in November 2024, representing 95.4% of the total currency in circulation, as Nigerians grappled with persistent cash scarcity despite efforts by the Central Bank of Nigeria (CBN) to ease the situation.
Data from the CBN showed a significant increase in cash held outside the banking system, up by N364.38 billion or 8.5% from N4.29 trillion in October.
Total currency in circulation also climbed to N4.88 trillion, reflecting a month-on-month rise of N328.91 billion or 7.2%.
The new high underlines Nigeria’s continued reliance on cash for transactions, even as the CBN works to promote digital payments.
On a year-on-year basis, the amount of currency outside banks rose by 51% compared to n3.08 trillion recorded in November 2023.
The consistent rise throughout 2024, which began with n3.28 trillion in January, culminated in November as the festive season heightened demand for cash amid limited banking infrastructure and financial inclusion challenges.
How cash outside bank grew in 2024
- The growth in currency outside banks has been steady throughout 2024, reflecting a growing demand for physical cash. February recorded N3.41 trillion, up by 4% from January, while March rose to N3.63 trillion, marking a 6.3% increase. April saw a slight decline to N3.61 trillion, but this was followed by steady increases in May and June, reaching N3.71 trillion and N3.79 trillion, respectively.
- July saw a marginal dip to N3.67 trillion, down by 3.3% month-on-month, but August recovered to N3.87 trillion, a 5.5% increase. The upward trajectory continued in September with N4.02 trillion and October at N4.29 trillion, representing month-on-month increases of 4% and 6.7%, respectively. By November, the N4.65 trillion peak was reached, driven by economic activity and preparations for the festive season.
- Currency in circulation also mirrored this trend, rising from N3.65 trillion in January to N4.88 trillion in November, with notable jumps in the last two months. Compared to November 2023, when currency in circulation was N3.35 trillion, the November 2024 figure represents a 45.7% year-on-year increase.
What you should know
Despite the increase in currency in circulation, Nigerians have faced severe cash scarcity towards the end of 2024. Bank customers reported difficulties in accessing cash, with ATMs frequently empty and withdrawal limits imposed at many bank branches.
This scarcity has exacerbated economic hardships, particularly during the festive season when demand for cash spikes.
- In many instances, individuals are forced to rely on POS operators, who charge exorbitant fees, sometimes as high as 5% to 10% of the withdrawal amount, making access to cash both costly and inconvenient for the average Nigerian.
- Several social media complaints by Nigerians suggest collusion between banks and POS operators, who allegedly favor supplying cash to the latter in exchange for high fees.
- In response, the CBN implemented several measures to address the crisis. Effective December 1, 2024, the apex bank directed customers to report cash withdrawal challenges directly to their banks through dedicated contact channels. Banks were also instructed to prioritise cash disbursements both over the counter and via ATMs, with the CBN threatening penalties for non-compliance.
- The CBN clarified that all denominations of the naira, including old and redesigned notes, remain legal tender to combat misinformation.
- However, reports indicate that cash shortages persist, with rationing and withdrawal limits still affecting customers in several parts of the country.
- The continued dominance of cash transactions, with 95.4% of total currency in circulation held outside banks in November, highlights systemic challenges in Nigeria’s financial system.
These include inadequate banking infrastructure, low trust in digital payment systems, and financial exclusion, particularly in rural areas.