A review of the Central Bank of Nigeria (CBN)’s Money and Credit Statistics has shown that money in circulation in the country has decreased from N3.1 trillion in December 2022 to N982 billion in February 2023.
This represents a 68.3 percent decrease over the period.
The CBN is responsible for making the naira available for transactions in the country.
In the last 15 years (since 2009), currency in circulation has never dropped to N982 billion. The lowest was in December 2009 when it fell to N1.181 trillion,
Nigerians have been experiencing a scarcity of cash, as the currency in circulation slumps from N3.2 trillion in December 2022 to N1.386 trillion in January 2023.
Lower money in circulation may have explained the inability of Nigerians to access cash.
The CBN has targeted mopping up the currency in circulation to tame inflation, corruption, and kidnapping. But policy makers have faulted it, saying is ineffective as there is no excess liquidity in the system.
Its naira redesign policy has led to frustrations as businesses and households struggle to access their cash at banks to make daily transactions.
Over 85.8% of currency in circulation, unbanked
One of the critical concerns of the CBN is that, of the currency in circulation, the percentage that is out of banks remain very high.
Out of the N982 billion available as currency in circulation, N843 billion was out of the banking system as at February 2023, representing 85.8 percent of the total cash in circulation.
This is higher than the figure of December 2022, which stood at 84.51 percent.
The CBN has announced that banks should dispense old notes (N200, N500, and N1000), following the continued scarcity of the naira.
Experts told Dataphyte that the CBN policy could have been better planned, blaming the development on lack of planning and hastiness.
The Director of Research and Strategy at Lagos-based Chapel Hill Denham, Tajudeen Ibrahim, faulted the CBN for the one-time approach to a cashless policy. According to him, moving the country to a cashless society should be gradual and not immediate, noting that Nigeria needed more time to achieve it.
The Chief Executive Officer, Centre for Promotion of Private Enterprise, Dr Muda Yusuf, said the policy had impoverished more Nigerians and rendered the retail end of the economy weaker.
“The policy has done more harm than good to the citizens and the economy,” he said.