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Economy

Cash Outside Banks Falls to N5.21tn, CBN Data Shows

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Cash

Cash outside banks Nigeria falls to N5.21tn in January 2026, according to Central Bank data, though over 90% of currency remains outside the banking system

Cash held outside Nigeria’s banking system declined by N197.68bn to N5.21tn in January 2026, according to the latest Money and Credit Statistics released by the Central Bank of Nigeria.

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Also read: Naira Recovers Sharply to ₦1,363.5 per Dollar

The data showed that currency outside banks dropped from N5.41tn in December 2025 to N5.21tn in January 2026, reflecting a month-on-month decrease of N197.68bn.

Despite the decline, the share of physical cash outside deposit money banks remained overwhelmingly high. The proportion of currency in circulation held outside banks stood at 90.91 per cent in January.

This means that more than nine-tenths of Nigeria’s cash in circulation remained outside the vaults of banks during the period under review, although the ratio was slightly lower than the 94.33 per cent recorded in December.

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Total currency in circulation also slipped marginally during the month, falling by N1.74bn to N5.731tn in January from N5.732tn in December.

Cash Use Still Dominates Economy

The figures indicate that while some cash returned to the banking system between December and January, the structure of cash usage in the Nigerian economy continues to be heavily tilted toward physical cash retention outside formal banking channels.

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A year-on-year comparison showed that cash outside banks remained significantly higher than the level recorded a year earlier.

In January 2025, currency outside banks stood at N4.74tn. By January 2026, the figure had risen to N5.21tn, representing an annual increase of N473bn.

Similarly, total currency in circulation expanded by N495.68bn year-on-year, rising from N5.24tn in January 2025 to N5.73tn in January 2026.

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Money Supply Contracts

Meanwhile, Nigeria’s broad money supply declined during the month, largely due to a fall in the country’s net foreign assets.

Data published by the Central Bank of Nigeria showed that broad money supply, known as M3, fell from N124.41tn in December 2025 to N123.36tn in January 2026, representing a month-on-month contraction of N1.05tn.

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M3 represents the broadest measure of money circulating in an economy, including physical currency, bank deposits and other highly liquid financial instruments.

Despite the monthly drop, the data indicated that money supply expanded strongly compared with the previous year. Broad money stood at N111.11tn in January 2025, meaning the latest figure represents a year-on-year increase of N12.26tn.

Foreign Assets Decline

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The contraction in liquidity was largely driven by a drop in Nigeria’s net foreign assets.

According to the apex bank’s data, net foreign assets declined to N29.61tn in January 2026 from N31.51tn in December 2025, marking a monthly fall of N1.90tn.

Net foreign assets represent the foreign holdings of the banking system, including reserves, foreign currency deposits and other external financial assets held by the central bank and commercial banks.

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On an annual basis, foreign assets also declined. In January 2025, the figure stood at N33.19tn, indicating a year-on-year drop of N3.58tn.

The reduction occurred during a period when the naira strengthened in the official foreign exchange market.

According to data from the Central Bank of Nigeria, the Nigerian currency closed January 2026 at about N1,391 to the United States dollar, compared with its opening rate of roughly N1,431 at the start of the month.

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Analysts note that when the naira appreciates, the local currency value of foreign assets held by the monetary authorities may decline when converted from foreign currencies.

Domestic Liquidity Expands

While foreign assets declined, domestic liquidity conditions strengthened.

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Net domestic assets increased to N93.76tn in January 2026 from N92.90tn in December 2025, representing a monthly increase of about N850.76bn.

On a year-on-year basis, domestic assets rose sharply from N77.92tn in January 2025, indicating an annual increase of N15.83tn.

Further breakdown of the data showed that the narrower liquidity measure known as M2 also declined during the month.

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M2 fell to N123.35tn in January 2026 from N124.40tn in December 2025, mirroring the N1.05tn contraction recorded in the broader M3 measure.

MPC Cuts Interest Rate

The developments come amid the central bank’s continued efforts to manage liquidity and control inflation through monetary policy adjustments.

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At the end of its 304th meeting in Abuja, the Monetary Policy Committee announced a reduction in the benchmark interest rate.

Governor of the Central Bank of Nigeria, Olayemi Cardoso, said the committee voted to cut the Monetary Policy Rate by 50 basis points to 26.5 per cent.

“The Committee decided to reduce the monetary policy rate by 50 basis points to 26.5 per cent,” Olayemi Cardoso said.

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The committee also retained the standing facilities corridor around the MPR at +50 and −450 basis points while maintaining the Cash Reserve Requirement for deposit money banks at 45 per cent and 16 per cent for merchant banks.

According to Olayemi Cardoso, the decision followed a balanced assessment of economic risks and signs of moderating inflation.

Headline inflation eased slightly to 15.10 per cent in January 2026 from 15.15 per cent in December, marking the eleventh consecutive month of year-on-year decline.

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Food inflation also dropped to 8.89 per cent from 10.84 per cent, while core inflation declined to 17.72 per cent from 18.63 per cent.

Also read: Naira Strengthens to N1,366 Against Dollar at Official Market

Analysts said the rate reduction signals cautious optimism about Nigeria’s inflation outlook, although they noted that the move is largely viewed as a credibility-building step rather than the start of aggressive monetary easing.

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Economy

Owei Lakemfa criticises Tinubu’s fuel subsidy policy

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Owei Lakemfa fuel subsidy criticism challenges Tinubu’s petrol policy, highlighting rising prices, workers’ purchasing power and Nigeria’s refining challenges

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Nigerian columnist and former journalist Owei Lakemfa has criticised President Bola Ahmed Tinubu’s decision to remove petrol subsidies, arguing in an opinion article published by Vanguard on Monday, 26 October 2026, that Nigeria’s persistent fuel-price pressures reflect years of policy failures, inadequate domestic refining and weak public accountability rather than an unavoidable shortage of petroleum resources.

Also read:Mbappé, Yamal, Kane, Olise Battle for Ballon d’Or

In his article, titled We Never Left Egypt, Only Prodigals Need to Return Home, Lakemfa challenges Tinubu’s comparison between the biblical story of Moses leading the Israelites out of Egypt and the government’s decision not to restore petrol subsidies.

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The columnist uses the metaphor to argue that Nigerians should not be expected to accept worsening living conditions in a country endowed with substantial natural resources.

The article follows remarks made by Tinubu on 19 October at an event organised by the City Boy Movement, where the President defended the removal of petrol subsidies and rejected calls to restore the policy.

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“I came and I removed subsidy the first day. I knew Nigeria would go bankrupt. There was nothing left to pay subsidy,” Tinubu said, according to TheCable’s report of the event.

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The President also invoked the biblical account of Moses and the Red Sea, arguing that Nigeria should not return to the former subsidy arrangement.

He urged young Nigerians to obtain their permanent voter cards and participate in the 2027 presidential election.

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Lakemfa takes a sharply different view. He argues that Nigeria’s oil resources, historical refining capacity and revenue potential should provide a stronger foundation for economic security than many households currently experience.

The columnist recalls Nigeria’s development of commercial oil production in the 1950s and its subsequent operation of four state-owned refineries.

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He also cites a 1973 statement by former Head of State Yakubu Gowon that money was not Nigeria’s principal problem, but how it was spent.

For Lakemfa, the central question is not whether the country possesses oil, but how successive administrations have managed its petroleum resources and the revenues generated from them.

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He alleges that years of inadequate refinery maintenance, insufficient investment in domestic refining and dependence on imported petroleum products have contributed to the difficulties facing consumers.

He also questions the cost structures associated with importing, transporting and distributing petrol.

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His criticism reflects a wider debate over whether Nigeria can reduce its exposure to international oil-price movements and foreign-exchange pressures by strengthening domestic refining and improving transparency across the petroleum supply chain.

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Nigeria’s fuel-subsidy debate predates the current administration. Successive governments have struggled with the cost of keeping petrol prices below market levels, concerns over smuggling, the financial burden on public finances and disputes over whether the benefits of subsidised fuel reach the intended beneficiaries.

Tinubu announced the removal of petrol subsidies during his inauguration on 29 May 2023.

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The decision triggered a sharp increase in pump prices and contributed to public concern over transportation costs, inflation and household purchasing power.

Lakemfa argues that the promised developmental benefits of subsidy removal have not adequately addressed the pressures experienced by ordinary Nigerians.

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He points to concerns about public infrastructure, healthcare, education, housing and insecurity, while questioning how the additional revenues generated by the policy have been allocated and accounted for.

The Federal Government, however, maintains that retaining the former subsidy arrangement would impose an unsustainable financial burden.

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It has argued that the reform is intended to improve fiscal stability and redirect public resources towards development priorities.

In October 2026, the Presidency announced additional measures to cushion the impact of rising global petroleum costs.

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These included a temporary decision by NNPC Retail to forgo its petrol retail profit margin, alongside plans involving crude-oil supplies to domestic refineries and efforts to moderate fluctuations in fuel costs.

Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele said the measures were intended to provide relief without restoring a blanket subsidy.

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The government maintained that targeted interventions and support for domestic refining would be preferable to returning to a system that it considers financially unsustainable.

Rising international oil prices have also contributed to recent increases in Nigerian petrol prices. Nairametrics reported in September that petrol was selling at approximately ₦1,400 to ₦1,450 per litre in major cities, reflecting the influence of higher crude prices and wider market pressures.

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Lakemfa nevertheless questions the extent to which international developments explain the difference between Nigeria’s pump prices and those in other oil-producing countries.

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He draws on figures attributed to federal lawmaker Afam Victor Ogene, who compared petrol prices and minimum wages in Nigeria, Iran, Libya and Saudi Arabia.

The figures cited in the comparison placed Nigerian petrol at between ₦1,300 and ₦1,500 per litre, against substantially lower prices in the other countries.

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A report by NN News Media published on 22 September also carried Ogene’s comparison, including the claim that Nigeria’s ₦70,000 national minimum wage buys significantly less petrol than the stated wage levels in the three other countries.

The comparison highlights the relationship between fuel prices and workers’ purchasing power.

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However, the figures should be treated as attributed estimates rather than a fully standardised international comparison, as petrol pricing policies, exchange rates, wage coverage and subsidy arrangements differ between countries.

The Nigerian minimum wage was raised to ₦70,000 under legislation signed by Tinubu in July 2024. Since then, organised labour has continued to raise concerns about the erosion of workers’ purchasing power amid rising transportation, food and other household costs.

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The Nigeria Labour Congress called in October 2026 for lower petrol prices and renewed minimum-wage negotiations, arguing that the existing wage floor had become inadequate in the face of escalating living expenses.

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Lakemfa also challenges warnings attributed to Oyedele about the economic consequences of restoring petrol subsidies.

According to the columnist, predictions of further currency depreciation and petrol prices reaching ₦2,000 per litre require transparent calculations and supporting economic analysis.

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The government’s position is that a return to blanket subsidies could increase fiscal pressures, encourage smuggling and expose public finances to renewed shocks.

The disagreement therefore extends beyond the immediate price of petrol to questions about the country’s fiscal priorities, energy policy and the distribution of economic costs.

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At the heart of Lakemfa’s argument is the belief that Nigeria’s natural-resource wealth should translate into better living conditions for its population.

His reference to Egypt serves as a political metaphor for a country whose citizens, he argues, should not be expected to accept hardship as an inevitable consequence of economic reform.

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He concludes that the responsibility for improving the country’s circumstances rests with its political leadership, calling for greater accountability and a renewed commitment to public welfare.

The debate over subsidy removal is likely to remain prominent as political parties prepare for the 2027 elections.

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For the Federal Government, the challenge is to demonstrate that its economic reforms can deliver measurable benefits while protecting public finances.

Also read:Mbappé, Yamal, Kane, Olise Battle for Ballon d’Or

For critics such as Lakemfa, the priority is to ensure that the costs of reform do not continue to fall disproportionately on households already struggling with rising living expenses.

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