Yuletide: Cash Outside Banks Hit N4.65trn, 95.3% of Currency in Circulation

Nume Ekeghe

Currency outside the banking system in Nigeria surged to N4.65 trillion in November 2024, representing 95.3 per cent of the total currency in circulation, according to the latest data from the Central Bank of Nigeria (CBN).

This marks a significant increase of N360 billion from N4.29 trillion in October when the proportion stood at 94.2 per cent.

The total currency in circulation which encompasses cash held both by the public and within banks also climbed to N4.88 trillion in November, up from N4.55 trillion in October.

According to analysts, while the 7.3 per cent rise in circulation is notable, the faster growth of cash held outside banks underscores an increasing preference for liquidity outside the formal banking system especially with Yuletide spending.

Since the start of the year, the share of currency outside banks has been on a steady rise. In January 2024, N3.28 trillion was held outside banks, accounting for 89.9 per cent of the total N3.65 trillion in circulation. By November, this figure had jumped by 41.8 per cent, illustrating a consistent upward trend in cash-based transactions and liquidity preference.

A monthly analysis revealed the dynamics of currency outside banks throughout 2024. In January, currency outside banks amounted to N3.28 trillion, representing 89.9 per cent of the N3.65 trillion total currency in circulation. By February, this figure increased to N3.41 trillion, a 4.0 per cent rise from January, while the total currency in circulation grew slightly to N3.69 trillion, with 92.5 per cent held outside banks.

In March, currency outside banks saw a notable 6.2 per cent increase, reaching N3.63 trillion. Total currency in circulation rose to N3.87 trillion, with the proportion of cash outside banks climbing to 93.8 per cent. However, April recorded a slight dip, with currency outside banks dropping to N3.61 trillion, a 0.6 per cent decline from March, even as the total currency in circulation edged up to N3.92 trillion. Despite the decline, 92 per cent of the currency remained outside the banking system.

May saw a recovery as currency outside banks rose to N3.71 trillion, a 2.5 per cent increase from April, while the total in circulation grew to N3.97 trillion, with 93.5 per cent held outside banks. This upward trend continued in June, with currency outside banks increasing to N3.79 trillion, a 2.2 per cent rise from May, as total currency in circulation climbed to N4.05 trillion, maintaining the 93.5 per cent share outside banks.

July marked a shift, as currency outside banks fell to N3.67 trillion, a 3.1 per cent drop from June, even though the total currency in circulation remained steady at N4.05 trillion. This reduced the proportion of cash outside banks to 90.6 per cent. In August, currency outside banks rebounded to N3.87 trillion, a 5.6 per cent increase from July, while the total in circulation reached N4.14 trillion, restoring the 93.5 per cent share outside banks.

September witnessed another rise, with currency outside banks climbing to N4.02 trillion, a 3.9 per cent increase from August. Total currency in circulation rose to N4.31 trillion.