Central Bank of Nigeria. Photo: CBN
* Figure represents a year-on-year increase of N559.16bn from N4.63tn recorded in May 2025.
Cash held outside Nigeria’s banking system rose to N5.19tn in May 2026, despite the Central Bank of Nigeria’s sustained push for digital payments and financial inclusion.
Latest money and credit statistics from the CBN showed that currency outside banks increased by N109.34bn, or 2.15 per cent, from N5.08tn in April 2026 to N5.19tn in May.
The figure also represented a year-on-year increase of N559.16bn, or 12.07 per cent, from N4.63tn recorded in May 2025, indicating that Nigerians continued to keep a large volume of cash outside formal banking channels.
The data further showed that currency in circulation rose from N5.65tn in April to N5.69tn in May 2026, an increase of N43.59bn, or 0.77 per cent. On a year-on-year basis, currency in circulation grew by N675.19bn, or 13.46 per cent, from N5.01tn in May 2025.
The figures mean that 91.27 per cent of all currency in circulation was held outside banks in May 2026. This was higher than the 90.03 per cent recorded in April 2026 but lower than the 92.40 per cent recorded in May 2025.
The development suggests that while the share of cash outside banks has moderated slightly compared with last year, the Nigerian economy remains heavily cash-driven.
This trend comes despite the expansion of electronic payment platforms, mobile banking, agency banking, fintech services, and the CBN’s broader efforts to reduce the dominance of cash in the economy.
The data also showed that bank reserves declined month-on-month by N840.77bn, or 2.43 per cent, from N34.60tn in April to N33.76tn in May 2026.
However, compared with May 2025, bank reserves rose by N2.90tn, or 9.39 per cent, from N30.86tn, reflecting stronger liquidity buffers in the banking system over the one-year period.
In December 2025, currency outside banks stood at N5.41tn before easing to N5.25tn in January 2026 and N5.19tn in February. It later dropped to N5.08tn in April before rising again in May.
The pattern indicates that cash outside banks remains elevated, even when monthly movements show short-term declines.
The persistence of large cash holdings outside banks may pose challenges for monetary policy transmission, as cash kept outside the formal banking system limits the ability of banks to intermediate funds through deposits and credit creation.
The Central Bank of Nigeria had earlier unveiled an ambitious plan to bring cash held outside the banking system into formal financial channels and expand financial inclusion by onboarding 50 million additional Nigerians by 2028.
The targets form part of the Nigeria Payments System Vision 2028 unveiled by the Governor of the Central Bank of Nigeria, Olayemi Cardoso, in Abuja, as the apex bank seeks to deepen digital payments, strengthen trust in financial services, reduce cash dependence, and position Nigeria as a leading payments hub in Africa.
Cardoso disclosed that the apex bank intends to reduce cash outside the banking system to less than 40 per cent of money in circulation by 2028. “I would like to see a situation where we will reduce cash outside the banking system to less than 40 per cent of money in circulation,” he said.
Such a shift could significantly improve monetary policy transmission, increase banking sector liquidity, enhance financial intermediation, and strengthen lenders’ ability to support economic activity.
