CBN currency management costs soar over 300% in 2024 amid cash crisis

The Central Bank of Nigeria (CBN) has revealed a staggering surge in its currency management expenses for 2024, with costs ballooning by over 300% in the wake of a protracted nationwide cash shortage and an aggressive push to stabilise the monetary system.

According to the apex bank’s recently released audited financial statement, currency issue expenses at the Bank level spiked to N315.18 billion in 2024, marking a 305.7% increase from N77.67 billion recorded in 2023.

Similarly, Group-level currency expenses skyrocketed to N238.65 billion, a massive jump from just N1.11 billion in the previous year—a reflection of the unprecedented scale of currency operations executed by the bank.

Currency issue expenses include the costs associated with printing, processing, distributing, and disposing of naira notes.

The CBN attributed the surge to heightened operational demands, particularly during periods of intense cash scarcity in early and late 2024, following the controversial naira redesign policy that began in late 2022.

The policy, which aimed to promote financial inclusion, curb cash-related crimes, and encourage a transition to digital transactions, inadvertently triggered widespread cash shortages that disrupted businesses and daily transactions across the country.

In response, the CBN massively ramped up the production and circulation of currency, while simultaneously retrieving and destroying old notes—a complex and costly logistical operation.

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Despite deploying a series of emergency measures—ranging from mandatory ATM cash-loading mandates to public hotlines for cash scarcity complaints—queues at cash machines and over-the-counter frustrations remained a persistent challenge for Nigerians throughout 2024.

The apex bank also intensified oversight and enforcement actions against Deposit Money Banks (DMBs) that failed to comply with cash availability directives.

Notably, three leading banks—Guaranty Trust Bank, Fidelity Bank, and Access Bank—were collectively fined N192.68 million for various cash distribution infractions.

GTBank incurred the largest penalty of N160.40 million following violations uncovered during a CBN “Mystery Shopping Exercise,” while Fidelity Bank and Access Bank were fined N27.28 million and N5 million respectively for mishandling hoarded or unfit currency notes.

In a further show of regulatory firmness, the CBN in early 2025 slammed additional fines totalling N1.35 billion on nine commercial banks—each paying N150 million—for non-compliance with cash distribution guidelines during the 2024 festive season.

Sanctioned banks included Fidelity Bank, First Bank, Keystone Bank, Union Bank, Globus Bank, Providus Bank, Zenith Bank, United Bank for Africa, and Sterling Bank.

The dramatic rise in currency management costs has reignited scrutiny of Nigeria’s monetary policy framework and the financial burden of abrupt policy shifts.

Nonetheless, the CBN managed to reverse its previous year’s deficit, posting a surplus in its 2024 financial year.

The turnaround, the bank said, was driven by improved operational controls, increased portfolio inflows, stronger diaspora remittances, better external reserves management—which rose from $36.6 billion in 2023 to $38.8 billion in 2024—and recoveries from earlier intervention programs.

However, other financial pressures mounted. Liquidity management expenses tripled, jumping from N1.5 trillion in 2023 to N4.5 trillion in 2024, due to intensified Open Market Operations (OMO) aimed at managing inflation amid heavy fiscal injections.

Additionally, losses from settled derivative contracts surged to N13.9 trillion, reflecting efforts to clear inherited foreign exchange obligations.