By Uche Amunike
Even though there is a significant case of an annual increase of N1.59 trillion in the amount of currency held outside the banks, Nigeria has continued to face cash scarcity, judging from available data from the money and credit statistics of the Central Bank of Nigeria (CBN), which indicates that a proportion of currency in circulation remains outside the banking system with over 90% consistently trapped outside formal financial institutions in 2024.
These statistics show an important year-on-year growth of 59% of N1 .59tn from N2.70tn in October 2023 when 89.6% of the total currency was outside banks.
Every month, the amount held outside banks increased by 6.8% or N270bn, compared to the N4.02tn, which was recorded in September 2024, when currency outside the bank represented 93.1% of the total currency in circulation of N4.31tn.
This marked a year-on-year increase of 66.3% compared to N2.42tn in September 2023, when 87.5% of the total was outside banks. The month-on-month increase was 3.8%.
Currency outside banks increased to N3.87tn in August 2024, accounting for 93.3% of the total currency of N4.14tn in circulation. This represented a year-on-year increase of 73.9%, compared to N2.22tn in August 2023 when 83.6% of the total currency was outside banks.
The trend continued in July 2024 with N3.67tn held outside banks representing 90.5% of the total currency in circulation of N4.05tn.
Even though efforts have been made to promote cashless transactions, data shows that Nigerians are constantly deeply reliant on cash, which could hinder the country’s push for modernized financial systems.
The President, Association of Senior Staff of Banks, Insurance and Financial Institutions, Olusoji Oluwole, has stated that the worsening cash shortage nationwide was caused by the CBN’s inability to meet up with the cash demands of commercial banks.
The bank has therefore announced, Friday, a fine of N150m per branch on Deposit Money Banks that are found guilty of facilitating the illegal flow of mint notes to currency hawkers and unscrupulous agents.
According to a report by Saturday Punch, there is a surge in the hawking of Naira notes at very high prices charged in different parts of the country, even as Nigeria currently struggles with limited access to cash in banking halls, irrespective of the threats so far made by the CBN.
This was disclosed in a circular signed and released on Friday, December 13, 2024, by the Acting Director of the Currency Operations Department, Mohammed Olayemi, stating that the CBN was concerned about the increasing prevalence of mint notes being traded by hawkers, stressing that it impeded the effective distribution of cash to customers and the general public.
It partly read: ‘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.’
