By Niyi Jacobs
The Central Bank of Nigeria’s (CBN) latest Money and Credit Statistics reveal a dramatic shift, with currency held outside banks surging by 66.2% year-on-year (YoY) in September 2024.
The volume of cash outside the banking system has grown to N4.02 trillion from N2.42 trillion in the previous year, marking an N1.6 trillion outflow.
The report underscores a shift in public behavior amid rising inflation, limited access to banking in rural areas, and low confidence in formal financial institutions.
This trend means that, by September, 93.1% of the currency in circulation was held outside banks, up from 87.5% in the previous year.
The CBN has responded by committing to release an additional N1.4 trillion into circulation to bolster ATM cash availability, aiming to counter the effects of this exodus on liquidity and the wider economy.
However, the increasing preference for cash outside banks complicates financial inclusion and could challenge the bank’s efforts to establish a cashless economy.
