Despite the rapid expansion of digital payment platforms, mobile banking, and cashless policy initiatives, Nigeria’s economy continues to demonstrate a strong dependence on physical cash.
The latest Annual Report of the Central Bank of Nigeria (CBN) reveals that currency in circulation (CIC) climbed to ₦5.73 trillion in 2025, up from ₦5.44 trillion in 2024, representing an increase of ₦290 billion or 5.3 per cent. Behind the figures lies a broader story about consumer behaviour, economic realities, and the challenges of balancing a digital economy with the persistent need for cash.
Growing Demand Despite Cashless Drive
The increase in currency circulation comes at a time when Nigeria has continued to promote electronic payments through bank transfers, mobile money, Point-of-Sale (PoS) terminals, and fintech innovations.
Yet, the CBN report indicates that demand for physical cash remains robust.
To meet this demand, the apex bank injected 3.43 billion newly printed banknotes into circulation during 2025. Of these, 1.23 billion notes were produced by the Nigerian Security Printing and Minting (NSPM) Plc, while 2.20 billion notes came from foreign security printing companies.
The figures suggest that while digital transactions continue to expand, millions of Nigerians still rely heavily on cash for everyday economic activities.
Several factors explain the sustained appetite for cash across Nigeria.
A significant portion of the country’s informal economy operates almost entirely on cash transactions. Small-scale traders, transport operators, artisans, farmers, and rural businesses often have limited access to digital payment infrastructure or simply prefer cash because of its convenience.
Intermittent network failures, unstable internet connectivity, electricity shortages, and occasional disruptions in banking services have also reinforced public confidence in keeping cash readily available.
For many Nigerians, cash remains the most reliable means of payment, particularly in areas where digital financial services are either unavailable or inconsistent.
Recognising the growing demand, the CBN approved the printing of 5.70 billion banknotes across different denominations in 2025.
This represented a 20.5 per cent increase over the 4.73 billion notes approved in 2024.
Under the allocation, the NSPM was assigned responsibility for producing 2.0 billion notes, accounting for 35 per cent of the approved volume, while foreign security printing firms were allocated the remaining 65 per cent.
The decision reflects the central bank’s effort to maintain sufficient supplies of clean and usable banknotes across the banking system.
One of the striking revelations in the report is Nigeria’s continued reliance on foreign security printing firms for the majority of its currency production.
Foreign companies printed over 64 per cent of the notes supplied during the year and were also assigned 65 per cent of the approved production programme.
This raises recurring questions about Nigeria’s domestic printing capacity and the ability of the NSPM to independently meet national currency requirements.
Greater investment in local production could potentially reduce costs, improve efficiency, strengthen national capacity, and lessen dependence on overseas suppliers.
Supply Challenges Persist Even with the expanded production programme, delivery challenges remained.
The report disclosed that a supplementary order of 1.50 billion banknotes, awarded to foreign printers in November 2025, was still being processed at the close of the year.
Similarly, the Nigerian Security Printing and Minting Plc had yet to deliver 760.76 million banknotes, representing about 38 per cent of its approved allocation.
These delays highlight the complexity of currency production and distribution, particularly when demand continues to rise.
Economic Activity Driving Cash Demand
According to the CBN, stronger economic activities were the principal driver of increased currency circulation.
As commercial transactions expanded across sectors, demand for banknotes also grew, requiring additional supplies to ensure smooth transactions throughout the country.
The apex bank maintained that expanding currency production was necessary to sustain public confidence in the payment system and avoid shortages that could disrupt economic activities.
While higher currency in circulation is often associated with increased liquidity, it does not automatically translate into inflation.
Economists generally note that inflation depends on several factors, including money supply growth, productivity, fiscal policy, exchange rate movements, and consumer demand.
Nevertheless, the steady rise in cash circulation will likely remain an important indicator for policymakers seeking to balance liquidity needs with price stability.
Looking Ahead
Nigeria’s payment landscape is evolving rapidly, with electronic transactions reaching record levels in recent years. However, the latest CBN figures demonstrate that the transition to a fully cash-lite economy remains gradual rather than immediate.
The increase in currency circulation reflects the realities of an economy where digital innovation coexists with deep-rooted reliance on cash.
For policymakers, the challenge is not merely printing more banknotes but ensuring that digital payment systems become more reliable, affordable, secure, and accessible, particularly in underserved communities.
Until that balance is achieved, physical cash is likely to remain a central pillar of Nigeria’s economic life, even as the country continues its journey toward a more digitally driven financial system.
