Cash Outside Banks Hits N5.19 Trillion as Nigeria Pushes Digital Payments
Nigeria’s cashless policy drive continues to gather momentum, but a significant amount of physical cash remains outside the banking system, highlighting persistent challenges in the country’s financial ecosystem.
Recent data from the Central Bank of Nigeria (CBN) shows that currency held outside commercial banks climbed to N5.19 trillion, raising concerns about cash hoarding despite increased adoption of digital payment platforms across the country.
The figure represents a substantial portion of the total currency in circulation and suggests that many individuals and businesses still prefer to keep large amounts of cash outside formal financial institutions.
Analysts say the trend reflects a combination of factors, including limited banking access in rural communities, concerns over electronic transaction failures, distrust of financial institutions, and the dominance of cash-based activities in parts of the informal sector.
The development comes at a time when digital payment transactions have recorded significant growth, driven by mobile banking, fintech innovations, point-of-sale (POS) terminals, internet banking, and instant transfer services.
Financial experts warn that excessive cash held outside the banking system can weaken monetary policy effectiveness, reduce liquidity available for lending, and make it more difficult for regulators to track financial activities.
They argue that improving confidence in digital payment infrastructure, expanding financial inclusion, and strengthening cybersecurity measures will be critical to encouraging more Nigerians to embrace electronic transactions and reduce dependence on cash.
The CBN has continued to promote a cashless economy through various initiatives aimed at enhancing payment efficiency, reducing the cost of cash management, and deepening financial inclusion.
Stakeholders believe that while digital payments are becoming increasingly popular, sustained efforts will be required to bring more cash back into the banking system and achieve the full objectives of Nigeria’s cashless policy agenda.
