More than 94% of total cash in circulation remained outside Nigeria’s banking system in 2025, underscoring a paradox where cash usage continues to rise alongside rapid growth in digital payments.
This was disclosed by the Committee of Heads of Banks’ Operations (CHBOs) at its annual conference held in Lagos on Friday, January 23, using data drawn from the Central Bank of Nigeria (CBN).
The figures show that while electronic payments have expanded by more than 300% since 2020, cash still dominates everyday transactions, forcing banks to rethink branch strategy, digital adoption, and financial inclusion frameworks.
In a keynote address during the event, CBN said it is planning to introduce ATM-Card ratio policy to curb cash shortages.
What CHBOs are saying:
Operations heads say Nigeria’s payments evolution is defying global assumptions that increased digital transactions automatically reduce cash usage.
They noted that instead of displacing cash, electronic payments have grown in parallel with physical money usage across the country.
- “Digital adoption has changed significantly, but Nigeria is different,” said Mrs. Abidemi Asunmo, Vice Chairman of the Committee of eBusiness Industry Heads (CeBIHs), noting that electronic transaction volumes are now rising at a similar pace as cash usage.
- “Branches are not dying; they are being reborn,” said Dr. Stanley Jacobson, adding that physical locations now serve as consultation and reassurance centres where trust remains critical.
- “Despite encouraging digital use, people still come to branches to withdraw or deposit cash, and the system is designed for queues,” said Mrs. Adebambo Famuyiwa of First Bank, highlighting operational inefficiencies sustaining cash dependence.
- “The future branch is not a cash counter; it is a digital hub,” said Mr. Daniel Awele, calling for branches to become digital conversion engines rather than transaction points.
CHBOs said the persistence of cash outside formal banking channels reflects deep structural issues, prompting banks to redesign branches into “phygital” hubs that blend digital efficiency with physical trust.
Expert views
Experts at the conference said Nigeria’s high cash reliance is driven by trust deficits, literacy gaps, and infrastructure challenges rather than resistance to technology.
They argued that with only about 5,500 bank branches serving over 100 million customers, scale remains a major constraint to financial inclusion.
- Asunmo explained that while routine services such as balance enquiries and transfers have largely moved online, branches are increasingly reserved for high-value, complex, and advisory services, especially for SMEs and corporates.
- Jacobson warned that rural and underserved communities still depend heavily on cash, proposing a three-tier branch model: digital guidance centres in urban areas, hybrid branches in semi-urban locations, and community access branches in rural areas.
- Famuyiwa said internal bank processes also reinforce cash usage, as staff continue to handle cash-heavy transactions amid infrastructure failures and network downtime.
- Awele said banks must use tools such as e-KYC, biometric verification, and data analytics within branches to migrate customers into digital ecosystems while maintaining physical assurance.
The experts agreed that forcing digital adoption is ineffective, stressing that cultural preferences and security concerns mean cash will remain relevant for the foreseeable future.
What you should know
Currency in circulation refers to the total cash issued by the CBN that is physically used within the economy and is published regularly in the apex bank’s money and credit statistics.
A large proportion of this cash is typically held by individuals and businesses rather than deposited in bank vaults.
- CBN data shows that total cash in circulation rose to N5.73 trillion in 2025.
- Of this amount, N5.43 trillion, representing about 94.76%, was held outside the banking system during the year.
- Earlier data from early 2025 showed that over 90% of Nigeria’s currency in circulation was already outside banks, indicating a persistent trend rather than a one-off spike.
High levels of cash outside the banking system can weaken the effectiveness of monetary policy and reflect underlying trust, access, and structural challenges within Nigeria’s payments ecosystem, even as digital transactions continue to expand at record speed.
I quite agree with the CBN and others for their observation about the amount of cash in circulation. However, very high proportion of Nigerian small business operators are not learned and those that are learned are misinformed about the transfer charges. The operators demand N100 transfer fee for transaction from the customers while the same customer will suffer another transfer charges from the bank. With this in mind, customer will prefer to withdraw cash to do transaction with small business operators than to suffer double charges.