The Central Bank of Nigeria (CBN) has raised concerns about the growing cash scarcity, as money held outside banks rose to N4.3 trillion in October 2024.
This figure represents 94.3% of the total currency in circulation, which stands at N4.55 trillion.
According to CBN data, the amount of cash outside banks increased by N1.59 trillion, or 59%, compared to October 2023, when N2.7 trillion was held outside the banking system. On a month-to-month basis, cash outside banks grew by 6.8%, rising from N4.02 trillion in September 2024.
This trend continued throughout 2024:
– September 2024: N4.02 trillion (93.1% of total currency).
– August 2024: N3.87 trillion (93.3%).
– July 2024: N3.67 trillion (90.5%).
The rise in cash outside banks persists despite efforts to encourage digital transactions. Experts warn that this reliance on cash could hinder Nigeria’s move toward modern financial systems.
Beyond Boders also learned that Olusoji Oluwole, President of the Association of Senior Staff of Banks, blamed the cash shortage on the CBN’s failure to supply enough cash to commercial banks.
In a circular issued on December 13, 2024, the CBN announced penalties for banks involved in illegal naira distribution. Banks found guilty of allowing new naira notes to reach currency hawkers will face a fine of N150 million per branch for the first offense.
The circular, signed by Mohammed Olayemi, Acting Director of Currency Operations, said:
“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.
“In this regard, 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 N150,000,000.00 (one hundred and fifty million naira) only, per erring branch, and at later instances, apply the full weight of relevant provisions of BOFIA 2020.”
This action follows reports of widespread naira hawking at high prices across Nigeria, making it difficult for citizens to access cash in banks.
The CBN says it remains committed to improving cash distribution and reducing illegal practices that undermine the financial system.
