The Central Bank of Nigeria (CBN) recently shared some interesting numbers. These numbers show that people are keeping a lot more cash at home or in their pockets instead of in the banks.
According to this data, the money people are holding outside banks has gone up by a big amount. In September 2024, it reached N4.02 trillion compared to N2.42 trillion in September 2023. That’s a jump of N1.60 trillion!
Just from August to September 2024, people took out N147.9 billion more cash from banks.
This tells us that more people like to have cash with them instead of putting it in the bank. This might make it tricky for banks when they need money to give out loans or other services.
93.1% of cash is not in banks
The numbers also show that most of the cash around is not sitting in banks.
- In September 2024, 93.1% of all cash was outside banks, up from 87.5% in September 2023.
- This might be because people do not completely trust banks, or because things cost more now, or because many people simply like using cash.
- When most cash isn’t in banks, the country might find it hard to use money in smart ways that help it grow.
- The report also noted an increase in the total cash that includes both banked and unbanked money.
- By September 2024, all money flowing around was at N4.31 trillion compared to N2.76 trillion one year before. That’s a rise of N1.55 trillion.
- So, more money is now kept outside than inside banks.
- From August to September 2024, the money out there grew another N166.2 billion.
Things to think about
The rise in cash held outside banks might show that people are not sure about the banks, especially now that things are getting pricier in Nigeria.
- Some people keep cash because banks aren’t easy to reach, especially in far-off places.
- This trend makes it hard for Nigeria to move towards using less cash and more digital means of money.
- When lots of cash stays outside, banks have less to lend, affecting businesses and individuals who need loans.
- Earlier in September, the CBN said it will penalize banks if they don’t provide enough cash through ATMs.
- The CBN also plans to add N1.4 trillion to the money going around in the next three months to help with cash flow.
- This is to make sure ATMs and banks have enough cash to give to people.
Previously, Newslodge reported that Nigeria’s total money supply (M3) increased by 62.8% from September 2023 to September 2024, even though the CBN tried to restrict money flow to fight inflation.
The CBN said that M3 rose to N108.95 trillion in September 2024, up from N66.94 trillion a year earlier.
From August to September 2024, the total money increased by 1.6%, reaching N108.95 trillion.