Nigeria’s currency in circulation has jumped 72.4% in five years to N5.73 trillion, highlighting a surprising trend in an economy that has increasingly embraced cashless payments. Central Bank of Nigeria (CBN) data showed that currency in circulation climbed from N3.325 trillion in 2021 to N5.733 trillion in 2025, with the sharpest increase recorded in 2024. Yet, behind the bigger numbers is a more troubling reality: Nigerians may be holding more naira, but that money buys less than it used to.
The CBN attributed the rise to increased economic activity and growing demand for cash, approving 5.71 billion currency pieces for circulation in 2025, a 20.5% increase from the previous year. However, economic analyst Dele Kelvin Oye argued that the headline figures do not tell the full story. According to his analysis, Nigeria’s average inflation rate of 23.01% in 2025 significantly outpaced the 5.37% nominal growth in currency in circulation, resulting in an estimated 14.3% decline in its real purchasing power.
The trend has created an interesting contradiction for Nigeria’s cashless policy. While banks, fintech companies and payment platforms continue to push Nigerians toward electronic transactions, physical cash remains essential for millions of consumers and small businesses, particularly within the informal economy. Inflation has also changed how much cash people need. As the prices of everyday goods rise, Nigerians need more naira notes to buy the same products and services, meaning higher cash circulation does not necessarily translate into greater purchasing power.
The history of the naira redesign also helps explain some of the unusual movements. Currency in circulation fell by 9.4% in 2022 before rebounding by 21.3% in 2023 and surging by 49% in 2024. Oye cautioned against treating the 2024 jump as normal cash demand because of the disruptions caused by the redesign and subsequent cash shortages. By 2025, growth had slowed considerably, suggesting that the exceptional increase seen the previous year was beginning to ease.
Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, offered a broader explanation, saying the increase should not be blamed entirely on inflation. Nigeria’s real GDP growth improved from 3.38% in 2024 to 3.87% in 2025, and stronger economic activity naturally creates additional demand for money. At the same time, Yusuf noted that electronic payments are expanding rapidly, particularly among small businesses and informal-sector operators. The result is a financial landscape where inflation is pushing up the amount of physical cash Nigerians need, while digital payments are steadily reducing the need to use that cash—leaving the N5.73 trillion figure as a sign not simply of more money in circulation, but of a changing Nigerian economy.
source: Business day
