Nigeria’s economy in November 2024 was significantly marked by a pervasive cash scarcity, despite ongoing efforts to promote digital transactions. Data from the Central Bank of Nigeria (CBN) revealed a substantial withdrawal of N364.38 billion from banks during the month, a clear indicator of the public’s struggle to access cash. This surge in demand drove the currency outside banks to a staggering N4.65 trillion, an 8.5% increase from October and a remarkable 51% year-on-year growth compared to November 2023. The total currency in circulation also climbed to N4.88 trillion, reflecting a 7.2% month-on-month increase. These figures underscore the persistent reliance on cash transactions within the Nigerian economy, a trend that presents significant challenges for monetary policy and financial stability.
The upward trajectory of cash held outside the banking system was a consistent theme throughout 2024, starting at N3.28 trillion in January and reaching its peak in November. While there were minor fluctuations throughout the year, with a slight dip in April and July, the overall trend was one of continuous growth. This surge intensified in the latter half of the year, with particularly sharp increases recorded in October and November, likely driven by increased spending and economic activity associated with the festive season. The corresponding increase in total currency in circulation mirrored this pattern, rising steadily from N3.65 trillion in January to N4.88 trillion in November. This parallel growth highlights the systemic nature of the cash preference, indicating a deep-seated structural issue within the Nigerian financial landscape.
The escalating cash demand throughout 2024 culminated in a severe cash crunch towards the end of the year, particularly in November. Reports from across the country painted a grim picture of widespread difficulties in accessing cash, with long queues at banks and ATMs frequently running dry. Banks were forced to ration withdrawals, imposing limits on the amount of cash customers could access. This scarcity had a disproportionate impact on ordinary citizens, exacerbating economic hardships, particularly during the festive season when expenses typically increase. The cash shortage became a focal point of public concern, prompting the CBN to implement a series of measures to alleviate the crisis and restore public confidence in the financial system.
In response to the escalating cash scarcity, the CBN introduced several interventions aimed at improving cash availability and addressing operational inefficiencies within the banking system. Starting December 1, 2024, the apex bank directed customers experiencing difficulties accessing cash to report directly to their banks, providing state-specific contact details for easier communication. The CBN also mandated Deposit Money Banks to prioritize cash disbursements over the counter and through ATMs, threatening penalties for non-compliance. These measures underscore the urgency of the situation and the CBN’s commitment to ensuring adequate cash flow within the economy.
Further complicating the cash crisis was public confusion surrounding the validity of different naira denominations. To address this, the CBN reiterated that all naira notes, including both old and redesigned versions, remained legal tender. This clarification sought to dispel any misconceptions and ensure the smooth circulation of all valid currency. However, despite these interventions and assurances, reports persisted of ongoing cash shortages, with withdrawal limits remaining in place in many areas, suggesting the underlying structural issues contributing to the cash crunch remained unresolved.
The consistently high percentage of currency circulating outside the banking system throughout 2024, peaking at 95.4% in November with a year-long average of 93.7%, reveals a deeply ingrained preference for cash transactions in Nigeria. This preference stems from a confluence of factors, including limited banking infrastructure, particularly in rural areas, which restricts access to formal financial services. A lack of trust in digital payment systems, coupled with concerns about security and reliability, also contributes to the preference for physical cash. Furthermore, inadequate financial inclusion, with a significant portion of the population still unbanked, reinforces the reliance on cash as the primary means of exchange. This entrenched cash dependency poses significant obstacles to the effective implementation of monetary policy and hinders efforts to promote a more modern and efficient financial system.
