From Adanna Nnamani, Abuja
Just over a year since the Central Bank of Nigeria (CBN) implemented the Naira redesign and other measures to reduce currency in circulation, the Apax Bank reports that 94% of the country’s money is held by citizens.
CBN stated in its March 2024 money and credit statistics that physical currency in circulation has surged compared to the previous year, indicating declining trust in the banking system and potential risks to economic growth.
According to the data, the currency in circulation was N3.87tn, higher than N3.69tn in February and N3.65tn in January.
However, currency outside banks have also increased significantly during the first quarter, growing from N3.28tn in January to N3.41tn and N3.63tn in February and March, respectively.
The rise suggests the CBN has injected more cash into the system due to scarcity issues in 2023. Despite the CBN’s efforts, the amount held outside banks has grown even faster, from N3.28 trillion in January 2024 to N3.63 trillion by March 2024 – a 150% year-on-year increase. This behavior stems from the cash scarcity crisis of 2023, caused by the CBN’s problematic implementation of the naira redesign policy, leading to a loss of trust in banks and a hoarding mentality among Nigerians. The CBN has acknowledged the issue of high volume and panic withdrawals, and despite its warnings against hoarding cash, Nigerians remain hesitant to return their funds to the banking system.