Nigeria’s currency in circulation increased by 72.4 per cent between 2021 and 2025, reaching N5.73 trillion, even as the Central Bank of Nigeria (CBN) continues to promote electronic payments and a cashless economy.
CBN data cited in a recent analysis showed that currency in circulation rose from N3.325 trillion in 2021 to N5.733 trillion in 2025. The figure fell to N3.011 trillion in 2022 before rising to N3.653 trillion in 2023, N5.441 trillion in 2024 and N5.733 trillion in 2025.
The CBN attributed the increase largely to expanding economic activity and rising demand for cash. It also approved a currency indent of 5,706.8 million pieces across various denominations in 2025, representing a 20.5 per cent increase from the 4,737.5 million pieces approved in 2024.
However, analysts said the growth in the nominal volume of currency does not necessarily translate into greater purchasing power for Nigerians, particularly amid elevated inflation.
Dele Kelvin Oye, Chairman of Alliance for Economic Research and Ethics Ltd/Gte, said the increase in currency circulation masked a decline in the real value of cash. He estimated that the purchasing power of currency declined by about 14.3 per cent in real terms in 2025, as average annual inflation reached 23.01 per cent while nominal currency in circulation grew by only 5.37 per cent that year.
According to the analysis, inflation has effectively increased the amount of physical cash Nigerians need to purchase the same goods and services. This means that a larger volume of naira notes in circulation can coexist with weaker purchasing power.
The trend also highlights the complex relationship between inflation and the CBN’s cashless policy. While digital payments are expanding rapidly, physical cash remains important, particularly among informal businesses, micro-enterprises and consumers who continue to rely heavily on cash transactions.
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the increase in currency in circulation should not be attributed entirely to inflation.
Yusuf argued that economic expansion was also contributing to higher demand for cash, noting that Nigeria’s real GDP growth accelerated from 3.38 per cent in 2024 to 3.87 per cent in 2025. He said rising economic activity naturally creates additional demand for currency.
At the same time, Yusuf acknowledged that the rapid adoption of electronic payments was moderating the growth in physical cash demand. Banks, fintech companies and payment platforms have continued to expand digital payment channels, allowing a growing number of transactions to take place without physical naira.
Currency circulation also recorded significant fluctuations following the 2022 naira redesign exercise. It declined by 9.4 per cent in 2022, recovered by 21.3 per cent in 2023 and then jumped by 49 per cent in 2024 before growth slowed considerably in 2025.
The latest figures therefore suggest that Nigeria’s cash economy is being shaped by three competing forces: economic growth is increasing demand for money, inflation is raising the amount of cash required for everyday transactions, while digital payments are reducing reliance on physical currency.
Despite the CBN’s continued push towards a cashless economy, the N5.73 trillion currency-in-circulation figure indicates that cash remains a significant component of Nigeria’s payment system.
