By Chinwendu Obienyi
Efforts by the Central Bank of Nigeria (CBN) to address scarcity of cash in circulation in the country yielded fruits as currency in circulation (CIC) stood at N11.21 trillion at the end of the first quarter (Q1) of 2024, Daily Sun investigations reveal.
According to the apex bank’s Money and Credit Statistics report, the currency in circulation for the month of January stood at N3.650 trillion as compared to N1.39 trillion recorded in 2023.
The increase continued further in February which saw about N3.69 trillion recorded as against N982.1 billion. By March, the figure increased from N1.68 trillion recorded in 2023 to N3.87 trillion in 2024.
This meant that CIC figure for Q1 2024 grew to N11.21 trillion as against N4.05 trillion recorded in the same reporting period of 2023, representing a 176.79 per cent increase.
Further analysis of the report revealed that currency held outside banks also surged. For instance, in January 2023, N792.18 billion was reported outside the banking system, which increased to N3.28 trillion by January 2024.
February saw an increase from N843.31 billion in 2023 to N3.41 trillion in 2024. By March, the amount had grown from N1.45 trillion in 2023 to a staggering N3.63 trillion in 2024, showing an increase of 150 per cent.
This increase meant that Nigerians are hoarding cash faster than the CBN which released enough to circulate. January 2024 saw 90 per cent of the currency in circulation being held outside the banking system climbing to 92 per cent in February and reaching 94 per cent by March.
Reacting to the development, economists who spoke to Daily Sun, whilst commending CBN’s effort in injecting cash into the economy, expressed concerns over the rise in hoarding.
They noted that the figure paints a picture of declining trust in the ability of banks to circulate cash in the economy after the money redesign programme had almost shut down the economy in 2022 and 2023.
Financial analyst, Kalu Aja, said, “There has been a lot of cash printed by CBN and we have seen an increase in M1 and even M2, so there is much more liquidity in the system. If you cast your mind back to the currency redesign, the failure of online banking for transactions, a lot of Nigerians most especially businesses got spooked. Hence, people are keeping the cash as some sort of emergency just in case the scarcity of cash comes up. This is the reason we had an increase in cash held outside the banks.
“Cash outside the banks have always been high but this situation is abnormally high because of what happened in the last two years. But as we journey down into the year, we might begin to see increase in online banking, Point of Sales (PoS) usage amongst others.”
The CBN stated that there was high volume withdrawals from the apex bank branches by Deposit Money Banks (DMBs) and panic withdrawals by customers from the ATMs in 2023.