You might want to check your pockets, because Nigerians aren't putting their money in banks as much as they used to. Between August 2023 and August 2026, the amount of cash circulating outside the banking system has absolutely ballooned. It jumped by a staggering 119.3 per cent. We’re talking about N2.223 trillion back then, and now we’re looking at a hefty N4.874 trillion chilling outside the vaults. That’s more than double, people!
Now, while the banks themselves have seen their reserves grow too – a respectable 79.3 per cent increase to N30.067 trillion over the same period – the cash ‘under the mattress,’ so to speak, has expanded at a much, much faster rate. This means less money is readily available for banks to do what they do best: lend it out, fund projects, and generally keep the economy humming.
The runaway train of cash leaving banks actually peaked in 2024. The Central Bank of Nigeria’s Money and Credit Statistics show that in August 2024 alone, currency outside banks shot up by a massive 74 per cent. Imagine going from N2.223 trillion in August 2023 to N3.868 trillion just one year later! That’s a serious leap.
After that initial explosion, the rate of growth began to slow down, though the cash kept flowing out. In August 2025, it was a 15 per cent increase, bringing the total to N4.450 trillion. By August 2026, the pace slowed further to 10.6 per cent, reaching N4.922 trillion. Some figures show N4.874 trillion from the source, but it represents the same trend of continued, albeit decelerating, growth.
When you crunch the numbers annually, it means that, on average, the cash held outside banks grew by about 30.3 per cent each year between August 2023 and August 2026. Compare that to bank reserves, which grew at a compound annual rate of about 21.5 per cent over the same three years. So, while bank reserves also saw a good run, the cash outside the system just kept on chugging along, and much faster.
Even the banks’ own reserves, which had been climbing steadily – up 35.6 per cent in August 2024 and another 35.2 per cent in August 2025 – saw a slight dip in August 2026. Reserves fell by 2.2 per cent that year, though they still ended up a massive N13.298 trillion higher than they were in August 2023. It's a sign that even the banks might be feeling the pinch of money being held elsewhere.
Analysts are watching closely because when cash isn't in the banks, it’s not available for lending. This chunk of money, now significantly larger than before, is effectively taken out of play for what economists call financial intermediation. This is the process of channeling funds from savers to borrowers. It’s like having plenty of food in the pantry, but it’s all locked away in individual rooms, making it hard to prepare a communal meal.
So, while the banks' total reserves increased by N13.298 trillion between August 2023 and August 2026, the amount of cash Nigerians are holding onto outside the banking system increased by a substantial N2.699 trillion. It’s a clear sign that people are opting to keep more cash on hand. Reasons could range from concerns about the economy to a preference for immediate liquidity, or perhaps even distrust in the formal financial system.