Kehinde Fajobi
Nigeria continues to grapple with cash scarcity despite a significant increase of ₦1.59 trillion in the amount of currency held outside banks year-on-year.
Data from the Central Bank of Nigeria (CBN) revealed that as of October 2024, ₦4.29 trillion, or 94.3 per cent of the total currency in circulation (₦4.55 trillion), was outside the banking system.
This marks a 59 per cent increase from October 2023, when ₦2.70 trillion, or 89.6 per cent, was outside banks.
On a month-to-month basis, currency outside banks grew by 6.8 per cent (₦270 billion), rising from ₦4.02 trillion in September 2024, which represented 93.1 per cent of the total currency in circulation of ₦4.31 trillion.
The trend persisted in previous months. In August 2024, ₦3.87 trillion was held outside banks (93.3 per cent of ₦4.14 trillion).
In July, ₦3.67 trillion remained outside banks, accounting for 90.5 per cent of the total currency in circulation of ₦4.05 trillion.
The reliance on cash has posed challenges to Nigeria’s cashless policy efforts.
The President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, Olusoji Oluwole, attributed the worsening cash shortage to the CBN’s inability to meet commercial banks’ cash demands.
Meanwhile, the CBN has taken steps to address illegal cash hawking.
On Friday, December 13, 2024, the apex bank announced fines of ₦150 million per branch on banks found facilitating the illegal distribution of mint naira notes to hawkers and unscrupulous agents.
In a circular signed by Mohammed Olayemi, acting Director of the Currency Operations Department, the CBN warned that further violations would attract stricter penalties under the Banks and Other Financial Institutions Act 2020 (BOFIA).
The circular stated: “CBN will continue to intensify the periodic spot checks to the banking halls/ATMs to review cash payouts to banks’ customers, as well as mystery shopping to all identified cash hawking spots across the country.”
It added, “Erring deposit money banks or financial institutions that are culpable of facilitating, aiding, or abetting, by direct actions or inactions, the illicit flow of mint banknotes to currency hawkers and unscrupulous economic agents that commodify naira banknotes shall be penalised at first instance ₦150,000,000.00 (one hundred and fifty million naira) only, per erring branch, and at later instances, apply the full weight of relevant provisions of BOFIA 2020.”
Despite these measures, Nigerians continue to struggle with limited cash access in banking halls and ATMs, further complicating the nation’s push for financial system modernisation.