According to the CBN, the total currency in circulation has reached N4.14 trillion, with N3.87 trillion of that amount outside the banking system, in the hands of individuals. That is to say that 6.66% of the country’s cash is held within the banking sector, while 93.34% is in the hands of individuals and businesses.
This situation poses itself as a challenge to the Nigeria formal banking system, despite efforts to promote financial inclusion and encourage cashless transactions. It remains evident that many Nigerians still prefer to use cash for daily transactions, even as digital banking services grow.
The total amount of money in circulation has increased by N1.48 trillion, a 55.8% increase compared to August 2023, year-on-year. In August 2023, the amount in circulation was N2.66 trillion, and this has risen to N4.14 trillion by August 2024. Notably, in August 2024, the amount in circulation grew by N91.08 billion, or 2.25%, from N4.05 trillion in July, a period of one month.
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Looking back earlier this year, N3.65 trillion was in circulation in January of 2024. This figure remained stable, depicting typical economic activity after the holiday season. By the end of February, the amount increased a bit to N3.69 trillion, an increase of N43 billion, or 1.18%.
With a month-on-month increase of N175 billion, a 4.76% growth, March saw the currency in circulation rising to N3.87 trillion. The surge continued in April, reaching N3.92 trillion, a N53 billion increase from March.
The surge is likely a result of increased consumer spending during the Easter period. The amount continued the upward trend to N3.97 trillion in May, while it rode further to N4.04 trillion in June, marking the most significant surge, an increase of N84 billion from May.
As at the time Mr. Olayemi Cardoso became the governor of the Central Bank of Nigeria in September 2023. The currency in circulation was N2.76 trillion. Recently, in a Monetary Policy Committee (MPC) meeting, Cardoso noted in a comment on the money supply that over N4 trillion was in circulation by July 2024. He noted that in order to improve cash availability in the system, an additional N1.4 trillion is expected to be added in the next three months.
According to Cardoso, the CBN is doing all it can to make sure that there is enough cash circulating to meet demands.
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