ABUJA, Nigeria (VOICE OF NAIJA)- Cash held outside Nigeria’s banking system rose to N5.19tn in May 2026, despite the Central Bank of Nigeria’s continued efforts to promote digital payments and expand financial inclusion.
Latest money and credit statistics released by 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, compared to N4.63tn recorded in May 2025, indicating that a significant amount of cash remained outside the formal banking system.
Data from the apex bank further revealed that currency in circulation rose from N5.65tn in April to N5.69tn in May 2026, reflecting an increase of N43.59bn, or 0.77 per cent.
On a year-on-year basis, currency in circulation expanded by N675.19bn, or 13.46 per cent, from N5.01tn in May 2025.
The figures showed that 91.27 per cent of total currency in circulation was held outside banks in May 2026.
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This was higher than the 90.03 per cent recorded in April 2026 but lower than the 92.40 per cent reported in May 2025.
The trend suggests that although the proportion of cash held outside banks has declined slightly from the previous year, Nigeria’s economy remains largely cash-based.
This comes despite the growing adoption of electronic payment platforms, mobile banking, agency banking, fintech solutions, and the CBN’s wider drive to reduce cash usage in the economy.
The statistics also indicated that bank reserves declined by N840.77bn, or 2.43 per cent, on a month-on-month basis, falling from N34.60tn in April to N33.76tn in May 2026.
However, bank reserves increased by N2.90tn, or 9.39 per cent, compared to N30.86tn recorded in May 2025, pointing to stronger liquidity buffers within the banking sector over the past year.
In December 2025, currency outside banks stood at N5.41tn before dropping to N5.25tn in January 2026 and N5.19tn in February. It later declined to N5.08tn in April before rising again in May.
The movement suggests that while there have been short-term fluctuations, the volume of cash held outside the banking system remains relatively high.
Analysts note that persistent large cash holdings outside banks could weaken monetary policy effectiveness, as funds kept outside the formal financial system reduce banks’ capacity to mobilise deposits and extend credit.
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Meanwhile, the CBN has unveiled plans to bring more cash into the formal banking system and expand financial inclusion by onboarding an additional 50 million Nigerians by 2028.
The targets are contained in the Nigeria Payments System Vision 2028, unveiled in Abuja by CBN Governor, Olayemi Cardoso, as part of efforts to deepen digital payments, strengthen confidence in financial services, reduce cash dependency and position Nigeria as a leading payments hub in Africa.
Cardoso said the apex bank aims to reduce cash held outside the banking system to below 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.
The move is expected to improve monetary policy transmission, boost banking sector liquidity, strengthen financial intermediation and enhance lenders’ capacity to support economic growth.