The Central Bank of Nigeria (CBN) has new data showing that the money people use every day, called “currency in circulation” (CIC), reached its highest level ever at N4.05 trillion in June 2024. This is a 56% increase from N2.6 trillion in June of the previous year.
CIC includes the money people have in their wallets and the cash that banks keep in their vaults.
For the first time in Nigeria’s history, CIC has gone over N4 trillion, according to the CBN.
From May 2024 to June 2024, the amount of money grew by 2%, rising from N3.65 trillion.
Newslodge noticed that 94% of this money is actually not in the banks. Instead, it’s in people’s pockets and drawers, shooting up to N3.79 trillion. Over the past year, the money outside banks has more than quadrupled!
What the Numbers Show
- In January 2024, CIC was N3.65 trillion, up 163% from N1.39 trillion in January 2023. The money outside banks also grew by 314%, from N792.18 billion to N3.28 trillion.
- In February 2024, CIC rose to N3.69 trillion from N982.1 billion in February 2023, a 276% increase. The money outside banks jumped to N3.41 trillion from N843.31 billion, up by 304.7%.
- By March 2024, CIC climbed to N3.87 trillion, compared to N1.68 trillion in March 2023, a rise of 129.8%. The money outside banks went from N1.45 trillion to N3.63 trillion, showing a 151.1% increase.
- In April 2024, CIC was N3.92 trillion, up 64.9% from N2.38 trillion in April 2023. Money outside banks also went up, reaching N3.61 trillion from N2.08 trillion, a 73.4% growth.
- May 2024 saw CIC reach N3.97 trillion, a 56.9% rise from N2.53 trillion in May 2023. The money outside banks increased to N3.71 trillion from N2.18 trillion, marking a growth of 70.4%.
- By June 2024, for the first time, CIC passed N4 trillion, hitting N4.05 trillion. The money outside banks also reached a new high of N3.79 trillion from N2.26 trillion in June 2023, representing a 67.5% increase.
What You Should Know
There are many reasons why people might keep cash instead of depositing it in banks. They might not trust banks, be worried about inflation, or just prefer using cash for daily expenses.
This increase in CIC can have good and bad effects on the economy. On the good side, more cash can mean people are spending more, which is a sign of a busy economy. But on the bad side, too much cash can cause prices to go up, leading to inflation.
Despite efforts by Nigeria’s Monetary Policy Committee (MPC) to control inflation, the headline inflation rate hit 34.19% in June 2024, up from 33.95% in May 2024. This is also much higher than the 22.79% rate in June 2023.
Month-on-month, June 2024’s inflation rate was 2.31%, up from May’s 2.14%.
If Nigeria’s money supply keeps growing without a corresponding increase in production, it could make inflation even worse. This would reduce people’s purchasing power and make it harder, especially for lower-income households, to afford daily necessities.