More than 94 per cent of Nigeria’s total cash in circulation remained outside the banking system in 2025, highlighting a growing paradox in which cash usage continues to rise despite rapid expansion in digital payments.
The disclosure was made by the Committee of Heads of Banks’ Operations (CHBOs) at its annual conference in Lagos on Friday, January 23, using data sourced from the Central Bank of Nigeria (CBN).
According to the data, electronic payments have expanded by more than 300 per cent since 2020, yet physical cash still dominates daily transactions, forcing banks and regulators to rethink branch strategy, digital adoption and financial inclusion frameworks.
In a keynote address, the CBN said it is planning to introduce an ATM-to-card ratio policy aimed at curbing persistent cash shortages and improving the efficiency of cash distribution.
Operations heads at the conference said Nigeria’s payments evolution is defying global assumptions that increased digital transactions automatically reduce cash usage. Instead, electronic payments and physical cash have grown in parallel.
“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 locations now serve as consultation and reassurance centres where trust remains critical.
Mrs. Adebambo Famuyiwa of First Bank said operational inefficiencies continue to sustain cash dependence. “Despite encouraging digital use, people still come to branches to withdraw or deposit cash, and the system is designed for queues,” she said.
Calling for a fundamental rethink of branch roles, Mr. Daniel Awele said, “The future branch is not a cash counter; it is a digital hub,” urging banks to turn branches into digital conversion centres 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 combine digital efficiency with physical trust.
Experts attributed Nigeria’s high cash reliance to trust deficits, financial 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 constraint to financial inclusion.
Asunmo explained that routine services such as balance enquiries and transfers have largely moved online, while branches are increasingly reserved for high-value, complex and advisory services, especially for SMEs and corporate clients.
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 added that internal bank processes also reinforce cash usage, as staff continue to handle cash-heavy transactions amid frequent infrastructure failures and network downtime.
Awele said banks must deploy tools such as e-KYC, biometric verification and data analytics within branches to migrate customers into digital ecosystems while maintaining physical assurance.
CBN data show that total currency in circulation rose to N5.73 trillion in 2025. Of this amount, N5.43 trillion—about 94.76 per cent—was held outside the banking system.
Earlier data from early 2025 had already shown that more than 90 per cent of cash was outside banks, indicating a persistent structural trend rather than a temporary spike.
Analysts warned that high levels of cash outside the banking system weaken the effectiveness of monetary policy and reflect underlying trust, access and infrastructure challenges, even as digital transactions continue to expand at record speed.
Nairametrics
