The amount of cash circulating outside Nigeria’s banking system increased to N5.193 trillion in May 2026, according to the latest monetary data released by the Central Bank of Nigeria (CBN). The development highlights the continued preference of many Nigerians to hold physical cash despite ongoing efforts to promote digital payments and financial inclusion.
CBN statistics showed that currency outside banks rose by 2.16 percent from N5.083 trillion recorded in April 2026. The May figure also exceeded the N5.188 trillion reported in February, indicating that a large volume of money remains outside formal banking channels.
The rise in cash held outside banks comes at a time when the banking sector is beginning to record signs of recovery in lending activities. Data from the apex bank revealed that credit extended to the private sector increased slightly in May after experiencing a decline in April.
Private sector credit grew by 0.56 percent to N81.041 trillion in May, compared to N80.585 trillion in the previous month. The increase, though modest, suggests that banks are gradually resuming lending to businesses and households after a period of slowdown.
Analysts believe that improved access to credit is important for supporting economic activities, especially for businesses that rely on loans to expand operations, purchase equipment, and create jobs. Increased lending can also boost consumer spending and contribute to overall economic growth.
Despite the improvement recorded in May, private sector credit remains well below the record level achieved earlier in the year. The CBN data showed that lending to the private sector reached an all-time high of N94.610 trillion in February 2026 before declining in subsequent months.
Compared to the February peak, the May figure represents a drop of 14.34 percent. Credit levels also remain lower than the N93.743 trillion recorded in January, indicating that the banking sector is yet to fully regain the momentum witnessed at the beginning of the year.
However, a broader comparison shows that lending activity is still stronger than it was at the end of 2025. Private sector credit in May was 6.87 percent higher than the N75.834 trillion recorded in December 2025, reflecting growth over a longer period.
Economic experts say the combination of rising cash outside banks and recovering private sector lending presents a mixed picture for the economy. While increased lending points to improving confidence among banks and borrowers, the continued growth in cash circulation outside the banking system may limit the amount of deposits available for financial intermediation.
The trend could also affect the effectiveness of monetary policy measures aimed at controlling liquidity and managing inflation. When more money remains outside the formal banking system, it becomes more difficult for financial authorities to track and influence cash flows within the economy.
Going forward, stakeholders will closely monitor whether private sector credit continues its recovery in the coming months and whether efforts to encourage electronic transactions and banking participation can help reduce the growing volume of cash held outside financial institutions.
The latest figures underline the importance of strengthening financial inclusion while ensuring businesses and households maintain access to affordable credit needed to support economic growth and development.
