Nigeria’s cash economy remained dominant in 2025, as the bulk of currency in circulation continued to sit outside the formal banking system, according to the Central Bank of Nigeria’s latest money and credit statistics.
Analysis of the data shows that in November 2025, currency outside banks stood at N4.91 trillion compared to a total currency in circulation of N5.26 trillion.
This means about 93.35% of all physical cash in the country was held outside the banking sector, with only a small fraction retained within the formal system.
What does the data show
The data reveals that the preference for cash outside banks has become a structural feature of Nigeria’s monetary landscape rather than a short-term reaction to policy changes.
In November 2025, currency outside banks stood at N4.91 trillion out of a total of N5.26 trillion currency in circulation, representing a rise from October 2025, when N4.65 trillion out of N5.06 trillion was held outside the banking system, giving a ratio of 91.87%.
The trend shows a renewed build-up of physical cash as the year closed, suggesting rising liquidity demand in the informal economy and persistent distrust or reluctance to keep money in banks.
Across 2025, the share of cash outside banks consistently remained above 89%. The year opened in January 2025 with N4.74 trillion held outside banks out of N5.24 trillion in circulation, representing about 90.49%.
The ratio stayed high through Q1 — February recorded 89.62% and March 91.91% — before rising further in Q2 and Q3. April posted 91.09%, and May increased to 92.39%, while June and July hovered at 89.74% and 89.79%, respectively, before rising again to above 92% in August and September.
Simply put, Nigeria has spent nearly two straight years with more than nine out of every ten naira bills circulating entirely outside the formal banking ecosystem.
Currency in circulation hits the highest level of 2025
The CBN data also shows that total currency in circulation climbed to N5.26 trillion in November 2025, the highest level of the year. This marked a steady rise from N5.01 trillion in May and N5.23 trillion in January, and a low of N4.92 trillion in August and September.
The upward trend suggests increasing transactional demand for cash as the economy adjusted to price pressures and spending intensified toward year-end.
Year-on-year, currency in circulation grew from N4.88 trillion in November 2024, meaning about N383.7 billion more cash was circulating in November 2025. Despite this rising supply, the proportion retained in banks did not meaningfully expand — meaning new cash issuance largely leaked into the informal sector rather than boosting deposits.
Bank reserves tell a deeper liquidity story. Bank reserves stood at N30.94 trillion in November 2025, only slightly below N31.58 trillion in October, but far above the N27.43 trillion recorded in January 2025. The data shows a strong rise in reserves through the year, even hitting N34.67 trillion in September 2025, before stabilising back near N31 trillion.
The year-on-year movement is even more striking. Bank reserves rose from N25.99 trillion in November 2024 to N30.94 trillion in November 2025 — a jump of almost N5 trillion in twelve months. This indicates tightening liquidity conditions and rising sterilisation, possibly reflecting higher cash reserve requirements and liquidity management actions by the central bank.
Yet despite this, banks still captured only a fraction of total physical cash. Currency inside banks remained in the narrow range of 6–10% of currency in circulation, showing that deposit mobilisation from physical cash remains weak.
There is also a clear divergence between cash growth and reserve growth. While bank reserves grew by nearly N5 trillion year-on-year, currency in circulation grew by less than N400 billion.
This suggests that tightening liquidity policies mopped up bank funds, pushing financial institutions to lock greater sums with the CBN rather than deploy them into credit. A higher reserve lock-up can restrict lending capacity, rising cost of funds and credit pricing pressures at a time when businesses already face steep borrowing costs.
Meanwhile, the informal economy absorbed most new cash issuance. Physical cash moved through retail trade, transport, household spending and small-scale enterprise with minimal recycling back into banks.
