Nigeria's cash scarcity issue persists,

Nigeria's cash scarcity issue persists,

despite a significant increase in currency held outside banks. The Central Bank of Nigeria's data reveals that a substantial proportion of currency in circulation, over 90%, remains outside the banking system. This trend has been consistent throughout 2024, with currency outside banks surging to N4.29tn in October 2024, a 59% year-on-year growth from N2.70tn in October 2023.

The data also shows a month-on-month increase of 6.8% in the amount held outside banks, compared to N4.02tn in September 2024. This is a significant rise, considering the total currency in circulation was N4.55tn in October 2024. The reliance on cash is evident, with Nigerians preferring to hold physical money rather than using formal financial institutions.

The President of the Association of Senior Staff of Banks, Insurance, and Financial Institutions, Olusoji Oluwole, believes the cash shortage is due to the CBN's inability to meet commercial banks' cash demands. This has led to a situation where Nigerians are heavily reliant on cash, hindering the country's efforts to modernize its financial systems.

The issue is further complicated by the proliferation of mobile money agents, who are now competing with banks for cash transactions. With over two million agents operating across Nigeria, they have become a vital part of the country's financial landscape, but also contribute to the cash scarcity problem .

To address this issue, the CBN has announced plans to fine banks N150m per branch if they are found guilty of facilitating the illegal flow of mint naira notes to currency hawkers and unscrupulous agents. The apex bank is also working to increase the availability of cash in ATMs and has threatened to sanction banks if they don't fill their ATMs .