Nigeria’s apex bank, the Central Bank of Nigeria (CBN), saw a dramatic spike in its currency management costs in 2024, spending a staggering N315.18 billion on issuing and managing cash—a more than 300% increase compared to N77.67 billion in 2023.Â
This surge, detailed in the CBN’s latest audited financial report, highlights the economic toll of efforts to stabilise the country’s monetary system following the naira redesign crisis.
The cost explosion wasn’t limited to the core bank. At the Group level, expenses surged from just N1.11 billion in 2023 to N238.65 billion in 2024—a spike that underscores the scale of the CBN’s intervention to keep Nigeria’s cash ecosystem functioning.
Why Did Currency Management Costs Rise So Sharply?
The massive increase in expenditure was largely a response to the aftermath of the controversial naira redesign policy launched in late 2022. Initially intended to promote financial inclusion, combat cash hoarding, and modernise Nigeria’s monetary system, the policy had unintended consequences. By early 2024, widespread cash shortages were crippling economic activity, particularly within the informal sector and rural areas.
To address the crisis, the CBN intensified its currency operations. This involved printing large volumes of new naira notes, retrieving old ones, and managing a complex nationwide distribution and destruction process. Each step incurred substantial costs—logistical challenges, high-speed printing, security arrangements, and extensive manpower all added to the financial burden.
Sanctions on Banks: Accountability Amid Crisis
To ensure compliance and ease the cash crunch, the CBN enforced stricter oversight on Deposit Money Banks (DMBs). It introduced mandatory ATM cash loading protocols and dedicated hotlines for cash scarcity complaints. However, many banks struggled to meet these requirements.
In 2024 alone, three major banks—Guaranty Trust Bank, Fidelity Bank, and Access Bank—were collectively fined N192.68 million for failures in cash distribution and handling of unfit currency. GTBank faced the heaviest penalty at N160.40 million, largely due to issues uncovered during a Mystery Shopping Exercise conducted by the CBN.
Further fines came in early 2025, when nine additional banks, including Zenith Bank, UBA, Sterling Bank, and First Bank, were sanctioned N150 million each—totaling N1.35 billion—for failing to ensure adequate cash availability during the 2024 festive season. The apex bank reiterated its zero-tolerance stance on lapses restricting public currency access.
Cash Still Dominates Despite Digital Push
Despite CBN’s sustained push for digital payments and cashless policies, cash remains king in Nigeria. According to CBN’s Money and Credit Statistics, currency outside the banking system jumped by 49.3% to N5.13 trillion as of December 2024. Total currency in circulation also grew to N5.44 trillion, with cash outside banks accounting for over 94% of this figure. This reflects the resilience of cash usage in daily transactions, particularly in underserved and rural areas with limited digital infrastructure.
Fiscal Recovery and Strategic Spending
Interestingly, the CBN managed to post a financial surplus in 2024, a sharp reversal from the deficit recorded in 2023. The turnaround was attributed to improved fiscal controls, stronger diaspora remittances, better external reserve management (from $36.6 billion in 2023 to $38.8 billion in 2024), and recoveries from earlier intervention programmes.
However, the Bank’s liquidity management costs also surged, climbing from N1.5 trillion in 2023 to N4.5 trillion in 2024. This increase was due to aggressive Open Market Operations (OMO) designed to mop up excess liquidity and control inflation, especially after large government spending injections. Additionally, losses from foreign exchange derivative settlements ballooned to N13.9 trillion, reflecting efforts to resolve backlogged FX obligations.
Outlook: Reforming for Stability
While the high cost of currency management raises concerns about sustainability, the CBN insists these expenses are part of a broader reform agenda. Its 2024 report emphasizes that its operational decisions, though costly, were necessary to restore confidence, ensure cash availability, and guide Nigeria’s monetary policy transition in a post-cash crisis era.
The bank also signaled ongoing efforts to strengthen transparency, governance, and operational efficiency, which are critical components as it works to stabilize the economy and regain public trust.
As Nigeria modernizes its financial system, balancing the cost of legacy cash operations with the push toward digital finance remains a central challenge for policymakers.
