The latest data from the Central Bank of Nigeria (CBN) shows that the currency in circulation (CIC) has reached a new year high of N2.99 trillion by October 31, 2023.
This was an increase of 8.33% or N230 billion from N2.76 trillion documented in the previous month.
It was also an increase of 115.11% or N1.6 trillion from N1.39 trillion recorded in January 2023.
The CIC comprises the currency outside the banking system and the vault cash of banks.
With this new high of almost N3 trillion, currency in circulation appears to be on the rise to the level it was in October 2023 (N3.29 trillion) before the naira redesign policy of the CBN.
More Insight
During a meeting of the Monetary Policy Committee (MPC) in October 2022, the former CBN Governor Godwin Emefiele said that the increase in inflationary pressure was being fuelled by the prevalence of N1,000 and N500 bills in circulation.
Emefiele, who has since been removed from his position, stated in October 2022 that the banknotes of N200, N500, and N1,000 would be redesigned.
He also announced the introduction of new notes, giving a deadline for old N200, N500 and N1,000 notes.
- The former governor said, “Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks on order of first-come-first-serve basis.
- “Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins.”
He bemoaned the difficulties of managing cash, citing widespread hoarding of banknotes as an example, with more than 80% of all currency in circulation stored in places other than commercial banks’ vaults.
He also mentioned the growing ease and risk of counterfeiting, as shown by a number of security reports, and the unfavourable opinion of the CBN that results from a lack of clean and fit banknotes.
The CBN’s naira redesign policy had a significant impact on the country’s currency supply, reducing it from N3.29 trillion at the end of October 2022 to N1.38 trillion by the end of January 2023.
According to the CBN’s numbers, this is a decrease of N1.91 trillion over the time under review.
Also, the total amount of naira in circulation in Nigeria dropped to N982 billion in February 2022, from N1.39 trillion in January 2023. This was the lowest level of circulating Naira since November 2008.
Essentially, the CBN mopped over N2 trillion in circulating cash between October 2022 and February 2023.
However, with the change in leadership at the apex bank, it appears that the central bank is allowing more cash to circulate.
The apex bank recently assured Nigerians of sufficient stock of currency notes at its disposal, dispelling rumours of scarcity of cash in banks and ATMs across the country.
The central bank also removed the deadline for the legal tender status of old N200, N500, and N1000 notes from the initial December 31, 2023, to forever, which likely signals a complete end to the cash scarcity crisis faced early this year.
