Currency held outside the banking system by Nigerians rose by 103.8 per cent to N4.923 trillion in September 2026 from N2.416 trillion recorded in September 2023, highlighting the sustained demand for physical cash despite the growing adoption of electronic payment channels.
Data from the Central Bank of Nigeria (CBN) Money and Credit Statistics showed that currency outside banks also increased by 10.3 per cent year-on-year, rising from N4.465 trillion in September 2025 to N4.923 trillion in September 2026.
The figures indicate that cash holdings outside the banking system have more than doubled in three years, underscoring the continued importance of physical currency in Nigeria’s economy despite efforts to promote financial inclusion and deepen digital payment adoption.
A breakdown of the CBN data showed that currency outside banks increased by 66.2 per cent from N2.416 trillion in September 2023 to N4.016 trillion in September 2024.
The figure subsequently rose to N4.465 trillion in September 2025, representing an 11.2 per cent increase over the corresponding period in 2024, before climbing further to N4.923 trillion in September 2026.
The sustained increase suggests that demand for physical cash remains substantial among households and businesses, notwithstanding the expansion of mobile banking, electronic fund transfers, point-of-sale (POS) transactions and other digital payment platforms.
Meanwhile, demand deposits in the banking system recorded significant growth, increasing by 70.8 per cent to N39.124 trillion in September 2026 from N22.903 trillion in September 2023.
According to the CBN statistics, demand deposits rose to N31.842 trillion in September 2024, representing a 39 per cent increase from the corresponding period in 2023.
The figure increased further to N34.642 trillion in September 2025, representing an 8.8 per cent year-on-year growth, before climbing to N39.124 trillion in September 2026, an increase of 12.9 per cent.
Demand deposits represent funds held in bank accounts that customers can access on demand for withdrawals, transfers and other transactions.
The simultaneous growth in currency outside banks and demand deposits indicates an expansion in both physical cash holdings and funds maintained within the formal banking system.
Reacting to the figures, economic and communications expert, Clifford Egbomeade, said the concurrent increase in both indicators reflected the coexistence of formal banking balances and significant demand for physical cash in Nigeria’s payment system.
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He, however, cautioned against attributing the growth in cash holdings to a single factor, noting that the two monetary indicators captured different aspects of economic activity.
“The simultaneous increase in demand deposits and currency outside banks points to the coexistence of formal banking balances and substantial demand for physical cash in Nigeria’s payment system.
“However, the two indicators measure different components of monetary activity. Demand deposits represent bank-account balances, while currency outside banks represents cash held outside the banking system.
“Their growth rates alone do not establish how much of the increase in cash holdings is attributable to economic growth, inflation, informal transactions or changes in payment preferences,” Egbomeade said.
His explanation highlights the need to consider broader economic conditions, including inflation, the size of informal economic activities and changing payment habits, when assessing the persistent demand for cash in Nigeria.
The development also raises questions about the effectiveness of efforts to transition towards a predominantly cashless economy, particularly as electronic payment infrastructure continues to expand across the country.
