Nigerians have withdrawn a staggering N923.16 billion from commercial banks within a year, signalling a growing distrust in the formal banking system and an increasing preference for physical cash, recent data from the Central Bank of Nigeria (CBN) has shown.
According to the apex bank’s latest Money and Credit Statistics, the total volume of currency held outside banks rose from N3.71tn in May 2024 to N4.63tn in May 2025, marking a 25 per cent year-on-year increase.
This sharp rise in cash withdrawals occurred amid growing economic uncertainty and fluctuating confidence in digital and banking platforms.
As of May 2025, the total currency in circulation in Nigeria stood at N5.01tn, of which N4.63tn — about 92.4 per cent — was held outside the banking system.
This reflects a persistent trend of Nigerians keeping money outside the vaults of financial institutions despite efforts by the CBN to encourage financial inclusion and limit cash hoarding.
While there was a marginal 1.42 per cent month-on-month increase in cash held outside banks from April’s N4.57tn, the long-term trend shows deeper structural issues in Nigeria’s monetary landscape.
Compared to the N3.97tn in circulation in May 2024, the total currency supply grew by 26.45 per cent over the 12-month period.
This development comes as the CBN continues to grapple with the challenge of excess liquidity and a sluggish adoption of electronic payment systems.
Analysts say the figures underscore the dominance of the informal economy, where cash transactions remain king.
The apex bank had kept its Monetary Policy Rate at 27.5 per cent in May 2025 — a move analysts interpreted as part of broader efforts to tame inflation and mop up excess cash from the economy. Despite these efforts, trends from late 2024 into 2025 paint a volatile picture.
Following a peak of N5.13tn in December 2024, driven by festive spending, currency held outside banks dropped sharply to N4.74tn in January, N4.52tn in February — the steepest fall of the year — before rebounding slightly in March to N4.60tn, and then slipping again to N4.57tn in April.
The year-to-date decline from December to April amounted to N555bn, a 10.8 per cent drop, which some experts attribute to the CBN’s liquidity tightening measures. However, May’s rebound raises concerns about the sustainability of such gains.
Economists say the preference for physical cash could stem from factors including poor network infrastructure, limited trust in financial institutions, and the need to avoid banking charges.
Others point to rising insecurity and economic instability, which may prompt households and businesses to keep cash within reach.
The data also reveals a marginal shift in the share of total currency in circulation held outside the banking system — down from 93.8 per cent in April 2025 to 92.4 per cent in May. Yet, the proportion remains overwhelmingly high, suggesting a long road ahead for financial system reforms and trust restoration.
As Nigeria pushes for a cashless economy and increased financial inclusion, the CBN may need to double down on public confidence measures, infrastructure investments, and consumer protection to stem the tide of cash hoarding.
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