Cash held outside Nigeria’s banking system rose to N5.19 trillion in May 2026, despite ongoing efforts by the Central Bank of Nigeria (CBN) to deepen digital payments and promote financial inclusion across the country.
Latest money and credit statistics from the CBN showed that currency outside banks increased by N109.34 billion, representing a 2.15 per cent rise, from N5.08 trillion in April 2026 to N5.19 trillion in May.
On a year-on-year basis, the figure grew by N559.16 billion or 12.07 per cent compared to N4.63 trillion recorded in May 2025, indicating continued strong reliance on cash transactions in the economy.
The data also revealed that currency in circulation rose marginally from N5.65 trillion in April to N5.69 trillion in May 2026, an increase of N43.59 billion or 0.77 per cent. Compared to May 2025, currency in circulation increased by N675.19 billion or 13.46 per cent.
The figures show that 91.27 per cent of all currency in circulation was held outside the banking system in May 2026. This marks an increase from 90.03 per cent in April 2026, although slightly lower than 92.40 per cent recorded in May 2025.
The data underscores Nigeria’s continued dependence on cash, despite the rapid expansion of digital payment platforms, mobile banking services, agency banking, and fintech solutions aimed at reducing cash usage.
Bank reserves, however, declined month-on-month by N840.77 billion or 2.43 per cent, falling from N34.60 trillion in April to N33.76 trillion in May 2026.
On a year-on-year basis, bank reserves increased by N2.90 trillion or 9.39 per cent, rising from N30.86 trillion in May 2025, reflecting improved liquidity conditions in the banking sector over the past year.
Historical data showed that currency outside banks stood at N5.41 trillion in December 2025 before fluctuating through the first half of 2026, declining to N5.25 trillion in January and N5.19 trillion in February, then easing to N5.08 trillion in April before rising again in May.
The pattern indicates persistent dominance of cash-based transactions in the economy, despite short-term fluctuations.
Financial analysts note that the high level of cash outside the banking system could weaken monetary policy effectiveness by limiting the volume of funds available for bank intermediation, deposit mobilisation and credit creation.
The Central Bank of Nigeria has in recent years intensified efforts to reduce cash dependence and expand financial inclusion through digital payment systems, fintech innovation and agent banking networks.
The apex bank’s broader strategy includes the Nigeria Payments System Vision 2028, which aims to onboard an additional 50 million Nigerians into the formal financial system.
CBN Governor Olayemi Cardoso has set a target of reducing cash outside the banking system to below 40 per cent of total money in circulation by 2028, as part of efforts to strengthen financial intermediation and improve monetary policy transmission.
According to the CBN, achieving this target would enhance liquidity in the banking sector, deepen financial inclusion, and support broader economic growth by improving access to credit and financial services.
However, the latest figures suggest that Nigeria remains a heavily cash-driven economy, even as digital payment adoption continues to expand across urban and semi-urban areas.
