Currency in circulation hits N5.73trn, but real value drops 14%

Currency in circulation rose 72.4% in five years to N5.73 trillion in 2025, but the real purchasing power of the naira has fallen sharply under persistent inflation. Analysts say the central bank printed more naira notes while Nigerians became poorer.

Nominal cash jumps, real value falls

Currency in circulation rose from N3.325 trillion in 2021 to N5.733 trillion in 2025, according to Central Bank of Nigeria (CBN) data. It declined to N3.011 trillion in 2022 before rising to N3.653 trillion in 2023, jumping 49% to N5.441 trillion in 2024 and reaching N5.733 trillion in 2025.

The CBN, in its 2025 Annual Report, attributed the increase to the increased pace of economic activity and rising demand for cash. The bank approved a currency indent of 5,706.8 million pieces across various denominations for 2025, up 20.5% from the 4,737.5 million pieces approved in 2024.

But economic analysts say the rise cannot be viewed solely as evidence of stronger economic activity. Inflation and the rapid expansion of electronic payments are also shaping demand for physical cash.

Analysts: Inflation is eating the naira

Dele Kelvin Oye, Chairman of Alliance for Economic Research and Ethics Ltd/Gte, reviewed CBN data from 2021 to 2025. He said the headline increase masked a decline in the real value of cash held by Nigerians. Oye estimated that purchasing power declined by about 14.3% in real terms in 2025. Nigeria’s annual average inflation rate stood at 23.01%, compared with a 5.37% increase in nominal currency in circulation.

“The CBN printed more paper. Nigerians got poorer,” Oye said, challenging the central bank’s characterisation of the increase as evidence of rising demand for cash. He said growth in physical cash should be assessed alongside price movements and the changing structure of payments in the economy.

Oye’s analysis showed that currency in circulation as a proportion of nominal gross domestic product stood at about 1.30% in 2025, compared with 1.46% in 2024 and 1.37% in 2021. He argued that inflation has forced Nigerians to use more naira notes to purchase goods and services whose prices have increased significantly, particularly in parts of the economy where cash remains dominant.

Redesign disruption and cashless shift

Currency in circulation declined by 9.4% in 2022 following the naira redesign policy announced by former CBN Governor Godwin Emefiele. It subsequently recovered by 21.3% in 2023 before recording a 49% increase in 2024. Oye said the unusually strong 2024 increase should not be interpreted as normal underlying demand for cash, given the disruptions to cash supply during and after the redesign. The 5.4% growth recorded in 2025 therefore represented a significant moderation.

Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, however, said it would be misleading to attribute the increase entirely to inflation. He said stronger economic activity was also contributing to higher demand for cash. “Certainly the growth in the absolute figures is a reflection of the growth in the economy,” Yusuf said.

Nigeria’s real GDP growth accelerated to 3.87% in 2025 from 3.38% in 2024. “As the economy grows, the demand for cash will also grow, so there’s a correlation between economic growth and demand for cash,” Yusuf said. He also noted that the slower pace of growth in currency in circulation between 2024 and 2025 could reflect the rapid adoption of electronic payments. “If you look at the numbers in terms of electronic payments, the growth is staggering in the growth of electronic payments over this period,” he said.

For the naira and Nigerian businesses, the key takeaway is clear: the N5.73 trillion cash stock reflects higher prices, not greater wealth. Inflation means households and businesses must hold and spend more naira to buy the same goods. That reality will keep pressure on living costs and complicate the CBN’s efforts to steer the economy toward a cashless system.