CBN data reveals over 91% of currency in circulation remains outside banks as cash transactions continue to dominate large segments of the economy…..
Fresh data from the Central Bank of Nigeria (CBN) has revealed that Nigerians held an estimated N5.19 trillion outside the banking system in May 2026, underscoring the country’s continued reliance on cash despite aggressive efforts to expand digital payments and financial inclusion.
The latest Money and Credit Statistics released by the apex bank showed that cash held outside commercial banks increased from N5.08 trillion in April to N5.19 trillion in May, representing a monthly rise of N109.34 billion or 2.15 percent.
On a year-on-year basis, the figure climbed by N559.16 billion from N4.63 trillion recorded in May 2025, reflecting a growth rate of 12.07 percent.
The trend comes at a time when regulators, banks and financial technology companies are investing heavily in electronic payment systems, mobile banking services, agent banking networks and digital financial solutions designed to reduce the economy’s dependence on cash.
Cash Still Dominates
The report also showed that total currency in circulation rose to N5.69 trillion in May, up from N5.65 trillion in April. Compared to the same period last year, currency in circulation expanded by N675.19 billion, representing annual growth of 13.46 percent.
A deeper analysis of the figures indicates that a significant portion of cash released into the economy remains outside formal banking channels.
According to the data, currency held outside banks accounted for 91.27 percent of total currency in circulation in May, compared to 90.03 percent in April.
In practical terms, this means that more than nine out of every ten naira in circulation were held by individuals, businesses and operators within the informal economy rather than being deposited in bank accounts.
Although slightly below the 92.40 percent recorded in May 2025, the latest figure highlights the enduring preference for cash across many sectors of the Nigerian economy.
Bank Reserves Decline
While cash outside the banking system continued to rise, reserves maintained by commercial banks with the CBN moved in the opposite direction.
The data showed that bank reserves fell from N34.60 trillion in April to N33.76 trillion in May, representing a decline of N840.77 billion or 2.43 percent within a month.
The reduction suggests tighter liquidity conditions within the banking sector during the period, even as more physical cash remained in circulation outside formal financial institutions.
Despite the monthly decline, reserve balances remained higher than levels recorded a year earlier. Compared to May 2025, bank reserves increased by N2.90 trillion, reflecting annual growth of 9.39 percent.
Digital Payments Drive Faces Reality Check
The figures highlight a key challenge facing Nigeria’s transition toward a cash-light economy.
While digital payments have grown rapidly through instant transfers, mobile banking platforms, fintech applications and agency banking services, physical cash remains deeply embedded in everyday economic activities, particularly within retail trade, transportation, rural markets and the informal sector.
Speaking recently at the launch of the Nigeria Payment System Vision (PSV) 2028 in Abuja, CBN Governor Olayemi Cardoso reiterated the regulator’s commitment to building a more inclusive and technology-driven financial ecosystem.
The initiative seeks to accelerate digital payment adoption nationwide while reducing dependence on cash transactions.
As part of the strategy, the CBN is targeting a significant reduction in currency held outside banks, with the goal of bringing the figure below 40 percent of total currency in circulation over the coming years.
The regulator also plans to expand digital payment infrastructure across the country, including the deployment of more than 10 million QR-code and tap-to-pay acceptance points in markets, transport hubs, rural communities and major commercial centres.
However, the latest figures suggest that despite growing digital adoption, cash remains king for millions of Nigerians, highlighting the scale of the challenge facing policymakers seeking to reshape the country’s payment culture.
