Nigerians held N5.19 trillion outside the banking system as of May 2026, underscoring the continued reliance on cash transactions despite sustained efforts by regulators, banks, and fintech companies to deepen digital payments adoption and financial inclusion.
According to the latest Money and Credit Statistics released by the Central Bank of Nigeria, currency outside banks increased to N5.19 trillion in May 2026 from N5.08 trillion recorded in April.
The increase represents a month-on-month rise of N109.34 billion, or 2.15%, while on a year-on-year basis, currency held outside banks grew by N559.16 billion from N4.63 trillion in May 2025, reflecting a 12.07% increase.
What the data is saying
The latest figures indicate that a significant amount of cash remains outside the formal banking system, even as electronic payment channels continue to expand across the country.
The growth in currency outside banks suggests that many individuals and businesses still prefer cash transactions for daily commercial activities, savings, and informal economic activities.
The trend also highlights the persistent role of cash within Nigeria’s economy despite increasing adoption of digital banking solutions.
Why cash usage remains high
Several factors continue to support strong cash demand across the country, including:
- A large informal sector that relies heavily on cash transactions.
- Limited access to banking services in some rural and underserved areas.
- Network and infrastructure challenges affecting digital payment systems.
- Consumer preference for cash in certain segments of the economy.
- Trust and familiarity associated with physical cash transactions.
While digital payment adoption has accelerated significantly in recent years, these structural factors continue to sustain high levels of cash circulation.
Digital payments continue to expand
The increase in currency outside banks comes despite substantial investments in:
- Mobile money services.
- Bank transfer infrastructure.
- Agent banking networks.
- Fintech payment platforms.
- Financial inclusion initiatives.
Financial institutions and technology companies have expanded digital payment channels nationwide, making electronic transactions more accessible to individuals and businesses.
However, the latest data suggests that growth in digital payments has not yet eliminated the strong demand for cash.
Implications for the economy
A high volume of currency outside the banking system can have several implications:
- Reduced deposits available for financial intermediation by banks.
- Lower visibility of economic activities occurring within the informal sector.
- Challenges for monetary policy transmission.
- Increased costs associated with cash management and circulation.
At the same time, the figures reflect the realities of a developing economy where cash remains an important medium of exchange for millions of people.
Outlook
As Nigeria continues to pursue a cash-lite economy, policymakers are expected to intensify efforts to improve digital payment infrastructure, expand financial inclusion, and enhance confidence in electronic payment systems.
Nevertheless, the latest data indicates that cash remains deeply embedded in the country’s economic activities, suggesting that the transition toward a more digitally driven payment ecosystem is likely to be gradual rather than immediate.
