Over 94% of Nigeria’s Cash Circulates Outside Banks

More than 94% of total cash in circulation remained outside Nigeria’s banking system in 2025, highlighting a growing paradox in the country’s financial ecosystem where cash usage continues to rise alongside rapid expansion in digital payments.

This disclosure was made by the Committee of Heads of Banks’ Operations (CHBOs) at its annual conference held in Lagos on Friday, January 23, using data sourced from the Central Bank of Nigeria (CBN).

According to the figures, electronic payments have expanded by more than 300% since 2020. However, cash still dominates daily transactions across the economy, forcing banks and regulators to reassess branch strategy, digital adoption, and financial inclusion frameworks.

In a keynote address at the event, the CBN revealed plans to introduce an ATM-to-card ratio policy aimed at reducing cash shortages and improving the efficiency of cash distribution nationwide.

What CHBOs are saying

Operations heads at the conference said Nigeria’s payments evolution is challenging the global assumption that increased digital transactions naturally reduce cash usage.

Instead of replacing cash, they noted that electronic payments have grown in parallel with physical money usage, reflecting unique structural and behavioural factors within the Nigerian economy.

“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 rising at nearly the same pace as cash usage.

“Branches are not dying; they are being reborn,” said Dr Stanley Jacobson, explaining that physical bank locations are increasingly serving as consultation and reassurance centres where trust remains critical.

Mrs Adebambo Famuyiwa of First Bank added that despite digital progress, customers still rely heavily on branches for cash withdrawals and deposits, with operational inefficiencies such as queues reinforcing cash dependence.

Mr Daniel Awele argued that future branches should evolve into digital hubs, acting as conversion engines that guide customers into digital ecosystems rather than serving as transaction points.

CHBOs said the persistence of cash outside the formal banking system reflects deep structural challenges, pushing banks to redesign branches into “phygital” hubs that combine digital efficiency with physical trust.

Expert views

Experts at the conference attributed Nigeria’s high cash reliance to trust deficits, literacy gaps, and infrastructure challenges rather than resistance to technology.

They noted that with only about 5,500 bank branches serving over 100 million customers, scale remains a major limitation to financial inclusion.

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While routine services such as transfers and balance enquiries have largely moved online, branches are increasingly reserved for high-value, complex, and advisory services, particularly for SMEs and corporates.

Experts agreed that forcing digital adoption would be ineffective, stressing that cultural preferences and security concerns mean cash will remain relevant in Nigeria for the foreseeable future.

What you should know

CBN data shows that total cash in circulation rose to N5.73 trillion in 2025, with N5.43 trillion about 94.76% held outside the banking system.

High levels of cash outside banks can weaken monetary policy transmission and reflect underlying trust, access, and structural issues, even as digital transactions continue to grow at record speed.