Nigeria’s cash circulating outside the banking system climbs to an unprecedented N4.2 trillion as of October 2024, reflecting a surge in cash dependency despite efforts to limit liquidity. This milestone highlights a shift from digital payments, largely attributed to the reversal of stringent cash policies introduced in early 2023.
The latest data from the Central Bank of Nigeria (CBN) reveals that cash outside banks has increased from a low of N792 billion in January 2023—when new naira notes were rolled out—to the current record high. Currency circulation has also grown, with N4.5 trillion in October 2024 compared to N4.3 trillion in September.
While overall money supply slightly declines to N107.6 trillion in October from N109.4 trillion in September, the significant rise in unbanked cash suggests continued reliance on physical currency in everyday transactions.
Despite the Central Bank’s tighter monetary controls, including raising the Cash Reserve Ratio (CRR) for banks in September 2024, these measures appear ineffective in curbing cash flow. The increase in cash availability indicates systemic challenges in implementing monetary policies to control liquidity effectively.
As ATMs across the country continue to struggle with cash shortages, Nigerians increasingly depend on Point of Sale (POS) operators for withdrawals. These operators charge fees as high as 5% to 10%, placing a financial burden on consumers.
Frequent complaints suggest collusion between banks and POS operators, as many banks prioritize supplying cash to POS terminals over ATM machines. This practice has led to public frustration, with calls for regulators to address unfair practices and ensure equal access to cash services.
The growing cash circulation outside banks signals a dependency on physical currency, which may counter efforts to modernize financial systems and digitize payments. Additionally, large volumes of unbanked cash circulating in the economy risk exacerbating inflationary pressures.
To address these concerns, experts emphasize the need for stricter regulations, equitable cash distribution strategies, and improved ATM services to ease public dissatisfaction and align with broader economic goals.
