Cash Outside Banks Declines to N4.8tn, Now 89.2% of CIC
Nume Ekeghe
Cash outside Nigeria’s banking system fell for the second consecutive month in July to its lowest level in eight months, even as credit to the private sector continued to expand, pointing to a gradual shift in the composition of liquidity towards bank-intermediated activity.
This is according to the latest monetary statistics from the Central Bank of Nigeria (CBN), which showed that currency outside banks declined by N118.67 billion, or 2.41 per cent, to N4.80 trillion in July from N4.92 trillion in June.
It followed a sharper 5.22 per cent month-on-month decline in June, when cash outside banks fell from N5.19 trillion in May. The two-month contraction has taken currency outside banks down by N389.64 billion, or 7.5 per cent, from the May level.
A breakdown showed that total currency in circulation also declined for the second consecutive month, falling 2.55 per cent to N5.38 trillion in July from N5.52 trillion in June, after a 2.93 per cent decline in the preceding month.
Currency outside banks consequently represented 89.24 per cent of total currency in circulation in July, compared with 89.11 per cent in June and 91.27 per cent in May.
While the annual position remains higher, the direction has moderated. Currency outside banks was 8.65 per cent higher year-on-year, compared with N4.42 trillion in July 2025, while total currency in circulation increased 9.36 per cent from N4.92 trillion a year earlier.
More significantly, the share of currency outside banks in CIC eased from 89.82 per cent in July 2025 to 89.24 per cent in July 2026, suggesting that the increase in the stock of cash has not translated into a corresponding increase in its share of total currency.
The decline in physical cash also came as liquidity within the banking system strengthened. Bank reserves rose by N2.73 trillion, or 8.04 per cent, month-on-month to N36.73 trillion in July, while broad money rose by 4.14 per cent to N138.78 trillion.
Against that backdrop, credit to the private sector continued its upward trajectory, although the pace of expansion moderated considerably in July.
CBN data showed that credit to the private sector increased by N171.80 billion, or 0.21 per cent, to N83.43 trillion in July from N83.26 trillion in June.
That extended the rise recorded in June, when private-sector credit increased by about N2.22 trillion. From April, the earliest monthly observation available in the current series, private-sector credit has risen by about N2.84 trillion, or 3.52 per cent, from N80.59 trillion to N83.43 trillion.
On a year-on-year basis, private-sector credit was up N6.71 trillion, or 8.74 per cent, from N76.72 trillion in July 2025.
The expansion, analysts said, is also stronger against the end-2025 position, with private-sector credit rising by about N7.59 trillion, or 10.01 per cent, from N75.83 trillion in December.
The analysts added that the continued increase is notable given that the CBN has maintained a relatively tight monetary policy stance, with the Monetary Policy Rate at 26.5 per cent. “It suggests that credit transmission to businesses has continued even as the cost of funds remains elevated,” they said.
Credit to government, however, moved sharply in the opposite direction in July, providing the clearest change in the composition of domestic credit during the month.
The CBN data also showed that net credit to government fell by N6.11 trillion, or 15.27 per cent, to N33.92 trillion in July from N40.03 trillion in June.
The monthly decline more than offset the marginal increase in private-sector credit and helped push net domestic credit down 4.82 per cent to N117.35 trillion from N123.29 trillion.
On an annual basis, however, government credit remained significantly higher, rising 43.17 per cent from N23.69 trillion in July 2025.