The most recent money and credit figures available on the Central Bank of Nigeria website show that as of the end of March, there was N3.87 trillion worth of cash in circulation.
Despite efforts to manage liquidity in light of the nation’s growing inflation rate, the value of naira increased. In January 2024, the amount of money in circulation was N3.87 trillion, up from N3.69 trillion in February and N3.65 trillion in January.
Total currency outside banks also grew gradually throughout the first quarter, rising from N3.28 trillion in January to N3.41 trillion in February and N3.63 trillion in March, on a similar trend.
According to the statistics, more over 90% of cash in circulation is kept outside of banks, meaning that Nigerians are keeping more cash.
In their personal statements, one of the members of the Monetary Policy Committee of the CBN at their March meeting, Muhammad Abdullahi, posited that the apex bank had identified high currency outside banks as one of the monetary drivers of the country’s inflation.
He said, “From available data, prices of domestic food items remain the major driver of headline inflation because of supply shortages and high cost of logistics and distribution.
“While this cannot be directly influenced using monetary policy tools, the bank’s response to the drivers of headline inflation is targeted at addressing identified monetary drivers such as money supply growth, exchange rate depreciation and Currency-Outside-Banks.”
The report’s further examination showed that cash kept outside of banks increased as well. For example, N792.18 billion was reported outside the banking system in January 2023; by January 2024, that amount had risen to N3.28 trillion.
In February of 2024, N3.41 trillion was recorded, compared to N843.31 billion in 2023. By March, the sum had increased by 150%, from N1.45 trillion in 2023 to an astounding N3.63 trillion in 2024.
The research states that in 2023, there were panic withdrawals from ATMs by clients and large volume withdrawals from apex bank branches by Deposit Money Banks (DMBs).
