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92% of currency in circulation is outside the banking system, signalling a failure of Naira redesign policy

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About 92% of the currency in circulation (CIC) is outside the banking system as of November 2023.

This surge is highlighted in the latest figures from the Central Bank of Nigeria (CBN), marking a notable rise from the 86% recorded in October 2022, just before the CBN’s naira redesign policy took effect.

The magnitude of this shift is further illustrated by the CIC, which soared by 21.37% in under three months, amid the intensifying cash crunch felt across the nation.

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Specifically, the CBN’s data reveals a climb to N3.35 trillion in CIC in November 2023, a significant jump from N2.76 trillion noted in September 2023, coinciding with Yemi Cardoso’s assumption of office as the governor of the CBN.

Also, cash outside banks experienced a 27.80% increase, reaching N3.08 trillion in November 2023 from N2.41 trillion in September 2023.

This surge in non-bank held cash comes amidst growing public concern over the sufficiency of currency in the banking system.

In response, the CBN issued a statement in November 2023, reassuring citizens of adequate currency stock and advising against panic withdrawals.

The backdrop to this scenario includes widespread reports of cash scarcity at banks, ATMs, Points of Sale, and Bureaux de Change (BOCs) across major cities in Nigeria.

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This shortage has placed considerable strain on Nigerian banks, which have struggled to meet customer withdrawal demands, leading to various operational challenges.

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  • During a meeting of the Monetary Policy Committee (MPC) in October 2022, the former CBN Governor Godwin Emefiele said that the increase in inflationary pressure was being fuelled by the prevalence of N1,000 and N500 bills in circulation.
  • He bemoaned the difficulties of managing cash, citing widespread hoarding of banknotes as an example, with more than 80% of all currency in circulation stored in places other than commercial banks’ vaults.
  • Emefiele, who has since been removed from his position, stated in October 2022 that the banknotes of N200, N500, and N1,000 would be redesigned.  He also announced the introduction of new notes, giving a deadline for old N200, N500, and N1,000 notes.
  • The CBN’s naira redesign policy had a significant impact on the country’s currency supply, reducing it from N3.29 trillion at the end of October 2022 to N1.38 trillion by the end of January 2023. However, with the change in leadership at the apex bank, it appears that the central bank is allowing more cash to circulate.
  • The central bank also  removed the deadline for the legal tender status of old N200, N500, and N1000 notes from the initial December 31, 2023, till otherwise advised, which, likely signals a complete end to the cash scarcity crisis faced early this year.
  • Nairametrics earlier reported  that the currency in circulation (CIC) reached a new year high of N3.4 trillion as of December 11, 2023. This further suggests an increase of N50 billion in less than one month.
  • This trend reveals a deeper behavioural pattern among Nigerians. The spike in CIC strongly suggests that more people are opting to hoard cash. This behaviour is a likely contributor to the palpable cash scarcity currently gripping the country.
  • As more cash is held outside the banking system, the availability of currency within banks and ATMs dwindles, leading to the challenges many Nigerians are facing in accessing cash.


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