Nigerians have increased their hoarding of cash, with as much as 94% of the currency in circulation held outside banks by March 2024.
An analysis of the latest money and credit statistics data from the Central Bank of Nigeria (CBN) shows that while currency in circulation was N3.87 trillion, currency outside banks was N3.63 trillion.
Also, the percentage of cash hoarding has been on the rise. January 2024 saw 90% of the currency in circulation being held outside the banking system, climbing to 92% in February, and reaching 94% by March.
This pattern reflects a growing lack of confidence in the banking system or an increased preference for cash transactions, possibly driven by economic uncertainty or other socio-economic factors.
This alarming trend signals a severe liquidity crunch, posing significant risks to the nation’s financial stability and economic growth.
Data from the first quarter of 2024 shows an alarming rise in the amount of currency in circulation.
In January 2023, the currency in circulation stood at N1.39 trillion, which more than doubled by January 2024 to reach ₦3.65 trillion.
This trend continued with February recording a cash circulation of N982.1 billion in 2023 and a significant jump to N3.69 trillion in 2024.
By March, the figures had escalated further from N1.68 trillion in 2023 to N3.87 trillion in 2024. This March figures show an increase of 130%, suggesting that the CBN has released a substantial amount of cash to address the scarcity created by its earlier currency redesign policy.
The currency held outside banks has similarly surged. In January 2023, N792.18 billion was reported outside the banking system, which increased to N3.28 trillion by January 2024. February saw an increase from N843.31 billion in 2023 to N3.41 trillion in 2024.
By March, the amount had grown from N1.45 trillion in 2023 to a staggering N3.63 trillion in 2024, showing an increase of 150%. This increase further means that Nigerians are hoarding cash faster than the CBN has released enough to circulate.
