Nigeria’s cash outside banks stands at $4.87 trillion

Cash held outside the Nigerian banking system rose to 4.87 trillion naira in August 2026, reversing three consecutive months of decline and raising new questions about the pace at which Nigerians are transitioning from physical cash to digital payments.

The latest monetary data from the Central Bank of Nigeria (CBN) shows that currency outside banks increased by N70.9 billion, or 1.48 per cent, from N4.80 trillion in July. The July figure had represented the minimum of the last eight months.

The August rebound followed a substantial decline between May and July, when liquidity outside banks fell from N5.19 trillion to N4.92 trillion and subsequently to N4.80 trillion, a cumulative reduction of about N391.8 billion.

Despite the latest increase, August’s figure remains $381.3 billion below the $5.25 trillion recorded in January. However, compared to August 2025, liquidity outside banks increased by about 419 billion naira, or 9.4%.

Financial analyst Tunde Ayileka says the latest increase should not automatically be interpreted as a reversal of Nigeria’s broader movement towards electronic payments.

He noted that the currency’s monthly movements outside of banks may be influenced by seasonal demand for cash, economic activity, withdrawals by households and businesses, as well as the continued importance of cash transactions in the informal economy.

An important indicator is the relationship between physical cash and the broader money supply. CBN data shows that broad money supply (M3) rose to 139.38 trillion naira in August, up 16.4% from 119.69 trillion naira a year earlier. M3 increased by N601.6 billion from N138.78 trillion in July.

This means that the increase in liquidity outside of banks occurred alongside the continued expansion of liquidity in the broader financial system rather than in isolation.