Money market

Currency in circulation hits N2.2trn in Nov — CBN

By Kayode Tokede

The Central Bank of Nigeria (CBN) has said currency in circulation increased by 7.1per cent to N2.2 trillion in November from N2.06 trilliion reported in October 2019.

The Managing Director, Cowry Assets Management Plc, Mr. Johnson Chukwu, had attributed the increase in currency in circulation for the month under review to penalty imposed on online payment transactions.

The apex bank in September 16 directed the strict implementation of Merchant Service Charge, which would impose more charges on all point of sale (PoS) transactions.

According to Chukwu,, “banks customers maybe shifting from online payment to cash. That is the only thing I know could be a leading factor to increase in currency in circulation for October. If you look at it, there is a N50 charges on PoS transactions and that alone will make bank’s customers to do transactions with cash instead of paying additional money. Mind you, for a low value purchase, customers are to pay N50 more than the amount of an item a customer bought. “It may be a contributing factor,” he added.

The apex bank disclosed that currency in circulation was N2.02 trillion in August , N2 trillion reported in July,N2.01 trillion in June and N2.11 trillion in May 2019. The apex bank on its official website said N2.16 trillion was total currency in circulation in April. For March, the apex bank data on its official website revealed N 2.15trillion and N2.24 trillion and N2.14 trillion in February and January respectively. Our correspondent gathered that the amount reported in February was the highest currency in circulation.

Nigerian NewsDirect gathered that currency in circulation in 2019 has remained at an average N2 trillion as against N1 trillion the previous year.

The Chief economist/head of research at PAC research, Mr. Moses Ojo attributed the hike in currency in circulation to 2019 general elections, stressing that the CBN’s cashless policy of 2002 has worked in movement of physical currency.

According to him, “There are a lot of informal activities that cannot be documented when it comes to movement of currency. The main reason why currency in circulation increased this year is due to the elections.

“Elections in Nigeria is based on cash settlement. The electorate will not want candidates to credit their account but wanted to collect cash before voting.

“The 2019 elections in my own view has led to an average N2trillion currency in circulation this year.

“It is going to take some time before the apex bank mop up currency in currency.”

However, as the CBN continued to compel Banks to boost their credit to the real sector of the economy, analysis of data published by the apex bank revealed that the loans increased by N3.46 trillion in 2019 (between January and November, 2019).

The data, stated that the credit offered to the private sector rose by 15per cent (N3.47 trillion), from N22.94 trillion in January 2019 to N26.41 trillion as of November 2019.

At the end of November 2019, the total net domestic credit in the Nigerian economy rose from N28.65 trillion in January to N35.51 trillion. This means that the net domestic credit in the economy rose by N6.86 trillion or 23.9per cent.

Out of the total N35.51 trillion net credit in the domestic economy, credit to private sector rose to N26.4 trillion, while credit to government also rose to N9.10 trillion.

That is, in the Nigerian economy, credit to private sector constitutes 74per cent, while credit to government constitutes 26per cent of the total net domestic credit.

During the year, credit to private sector hits the highest in December 2019. On the other hand, credit to the government rose to the highest in October.

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