Nigeria has closed 2025 with a historic surge in physical cash held outside the banking system, as currency outside banks climbed to an all-time high of N5.4 trillion.
The development highlights a growing preference for cash among individuals and businesses despite years of efforts to push digital payments.
Data from the Central Bank of Nigeria (CBN) shows that the amount of cash circulating beyond formal banking channels has never been higher, underscoring shifting liquidity patterns in the economy and raising fresh questions about the effectiveness of Nigeria’s long-standing cashless policy ambitions.
The rise in cash outside banks has unfolded alongside a broader expansion in money supply. According to figures tracked by Nairametrics, Nigeria’s total money supply stood at approximately N124.4 trillion by the end of 2025, pointing to increased liquidity in the financial system at a time of elevated inflationary pressures and evolving monetary policy priorities.
Total currency in circulation also reached a record N5.7 trillion in December 2025, indicating that only a small fraction of Nigeria’s physical cash remains within deposit money banks. The data suggests a widening gap between formal financial channels and the cash economy, even as regulators continue to promote electronic payments, mobile banking, and financial inclusion initiatives.
Currency outside banks represents physical cash held by households, traders, and businesses beyond the vaults of regulated financial institutions. At N5.4 trillion, the figure has surpassed the previous record of N5.125 trillion set in December 2024, cementing a new peak in Nigeria’s cash dependency.
While December typically sees a seasonal rise in cash as the central bank ensures adequate liquidity for festive spending, the scale of the 2025 increase stands out. Throughout the year, currency outside banks averaged roughly N4.5 trillion, before surging sharply toward the N5 trillion threshold in the final months, reflecting sustained demand for physical money.
The continued climb in currency in circulation appears to conflict with the CBN’s historic drive toward a cashless economy. However, under the current leadership, monetary authorities have leaned more heavily on orthodox policy tools to manage liquidity, focusing on inflation control, interest rate adjustments, and broader price stability rather than aggressive cash restriction.
This marks a notable departure from the approach of the previous CBN administration, which pursued a far tighter cash environment in the build-up to the 2023 general elections. That strategy culminated in one of the most dramatic cash contractions in Nigeria’s recent history, reshaping public behavior and financial activity nationwide.
In January 2023, currency outside banks plunged to a historic low of N792.1 billion following the rollout of the controversial naira redesign policy under former CBN Governor Godwin Emefiele. The policy severely limited access to cash, triggering widespread economic disruptions, long queues at banks, business slowdowns, and public outrage. Many observers believed the initiative was partly designed to curb the use of cash for election-related spending, an allegation the central bank denied at the time.
Under the current CBN Governor, Yemi Cardoso, the policy tone has shifted. The apex bank has pivoted toward more traditional monetary management, prioritizing exchange rate stability, inflation control, and financial system confidence while still supporting digital payment growth and financial inclusion.
The rising availability of cash outside banks has also fueled the rapid expansion of Nigeria’s agency banking and Point-of-Sale (PoS) ecosystem, turning cash access into a thriving commercial activity. For thousands of PoS operators across the country, facilitating withdrawals and cash transactions has become a lucrative business model, especially in areas with limited bank branch coverage.
Nairametrics recently reported that the cost of PoS terminals surged sharply between 2023 and 2025, rising by 30 percent to 100 percent due to inflation, foreign exchange volatility, and increased logistics expenses. Entry-level PoS devices that previously sold for N15,000 to N20,000 now cost around N21,500, while more advanced smart terminals have doubled in price, climbing from N30,000–N40,000 to between N62,000 and N85,000.
At the same time, the CBN has tightened oversight of agent banking operations, introducing stricter compliance rules, mandatory geo-tagging of PoS terminals, and penalties that include a minimum fine of N5 million, plus N300,000 per day for continued violations. These measures signal a more regulated and capital-intensive phase for Nigeria’s cash distribution network.
Credit: The Sun