By Abubakar Yunusa
Nigerians held N5.19tn outside the banking system in May 2026, underscoring the continued dominance of cash transactions despite sustained efforts by regulators and financial institutions to deepen digital payments and financial inclusion.
Latest Money and Credit Statistics released by the Central Bank of Nigeria showed that currency outside banks rose from N5.08tn in April to N5.19tn in May, representing an increase of N109.34bn or 2.15 per cent within one month.
The figure was also N559.16bn higher than the N4.63tn recorded in May 2025, indicating a year-on-year growth of 12.07 per cent.
The development comes amid ongoing campaigns by the apex bank and financial institutions to encourage the use of electronic payment channels, including bank transfers, mobile money, fintech platforms and agent banking services.
The CBN data further revealed that total currency in circulation increased to N5.69tn in May from N5.65tn in April, reflecting a month-on-month rise of N43.59bn or 0.77 per cent.
On a yearly basis, currency in circulation expanded by N675.19bn, or 13.46 per cent, from N5.02tn recorded in May 2025.
An analysis of the figures showed that a larger proportion of cash in circulation remained outside the formal banking system. Currency outside banks accounted for 91.27 per cent of total currency in circulation in May, up from 90.03 per cent in April.
The figures indicate that more than nine out of every 10 naira in circulation were held by households, businesses and operators within the informal sector rather than being deposited in banks.
Although the ratio was slightly lower than the 92.40 per cent recorded in May 2025, it highlights the persistent reliance on cash across key sectors of the economy.
Meanwhile, reserves held by deposit money banks with the CBN declined during the period. Bank reserves dropped from N34.60tn in April to N33.76tn in May, representing a decrease of N840.77bn or 2.43 per cent.
The decline points to lower liquidity buffers within the banking sector, even as more cash remained outside formal financial channels.
However, compared to the corresponding period last year, bank reserves increased by N2.90tn from N30.87tn, representing annual growth of 9.39 per cent.
The latest data suggest that Nigeria’s shift towards a digital economy is progressing alongside a sustained demand for physical cash rather than replacing it entirely.
Despite rapid growth in instant payment platforms, mobile banking applications, fintech services and agent banking networks, cash remains central to retail trade, transportation, informal commerce and economic activities in many rural communities.
Speaking recently at the launch of the Nigeria Payment System Vision 2028 in Abuja, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, said the initiative was designed to accelerate the country’s transition to a more inclusive and technology-driven financial ecosystem.
Under the vision, the apex bank plans to reduce cash circulating outside the banking system to below 40 per cent of total currency in circulation.
The strategy also includes the deployment of more than 10 million QR-code and tap-to-pay acceptance points across markets, transport hubs, rural communities and commercial centres nationwide.
