Key Points
- Currency outside banks hits N4.29 trillion, up 59% from 2023.
- CBN warns naira hawkers as penalties hit N150 million.
- Nigerians remain heavily reliant on cash despite cashless policies.
Even if the amount of money stored outside of banks has increased by N1.59 trillion annually, Nigeria still faces a cash crisis.
Cash outside banks hits record N4.29 trillion in October
According to the Central Bank of Nigeria’s (CBN) money and credit statistics, over 90% of the currency in circulation in 2024 will still be outside of official financial institutions.
Currency held outside of banks increased to N4.29 trillion in October 2024, accounting for 94.3% of the N4.55 trillion in circulation. Compared to N2.70 trillion in October 2023, when 89.6% of the total cash was held outside the banking sector, this is a 59% increase.
Similar patterns were noted in earlier months. Of the N4.14 trillion in circulation as of August 2024, N3.87 trillion, or 93.3%, was held outside of banks. From N2.22 trillion in August 2023, when 83.6% of the money was outside of banks, this amounts to a 73.9% rise.
Ninety-five percent of the N4.05 trillion in circulation in July 2024—or N3.67 trillion—was stored outside of banks.
Data indicates that Nigerians continue to rely significantly on cash despite initiatives to encourage cashless transactions, which presents a problem for the nation’s drive toward a modern financial system.
The Association of Senior Staff of Banks, Insurance and Financial Institutions president, Olusoji Oluwole, blamed the CBN’s incapacity to satisfy commercial banks’ cash demands for the growing cash scarcity.
Currency hoarding rises despite push for cashless transactions
According to a report by Saturday PUNCH, Nigerians are finding it difficult to obtain cash in banking halls despite threats from the CBN, which has led to an increase in naira peddling at outrageous prices nationwide.
On Friday, December 13, 2024, the apex bank released a circular in which it addressed the matter. Mohammed Olayemi, acting head of the CBN’s Currency Operations Department, signed the memo, which voiced concerns over street vendors’ increasing use of mint naira notes.
The circular reiterated the CBN’s resolve to stop the naira from becoming a commodity and cited a previous instruction dated November 13, 2024.
Any financial institution branch found to be in fault would be subject to a N150 million fine for the first infraction under the directive. The Banks and Other Financial Institutions Act (BOFIA) 2020’s provisions would impose harsher penalties for subsequent crimes.
The CBN announced that it would use “mystery shoppers” to find illegal cash hawking locations across the country and enhance spot checks at ATMs and banking rooms.
“The CBN will continue to conduct mystery shopping at all identified cash hawking spots across the country and intensify periodic spot checks at banking halls and ATMs to review cash payouts to bank customers,” the circular stated.
