Tony Chukwunyem 
After falling to N32.19 trillion in January this year, demand deposits headed north to hit N33.96 trillion in March, latest data released by the Central Bank of Nigeria (CBN) shows.
Demand deposits are customers’ funds in current and savings accounts, which they (customers) can withdraw or make transactions with at any time without needing to give prior notice to the bank.
They are distinct from fixed deposits, which have a fixed maturity date and may incur penalties for early of the money atistics data published by the apex bank, indicates that demand deposits, which stood at N33.69 trillion in December last year, fell to N32.19 trillion in January this year, before climbing to N33.20 trillion and N33.96 trillion in February and March respectively.
Analysts note that deposits in Nigerian banks have generally been maintaining an upward trend in recent years amid increased competition between deposit money banks (DMBs) and fintechs.
Interestingly, in his personal statement at the CBN’s Monetary Policy Committee (MPC) meeting held in February, a member of the committee, Mustapha Akinkunmi, highlighted the sharp decline in banking sector total deposits in January this year. He stated: “The naira continues to appreciate in a stable manner amidst declining deposits in the banking sector.
The drop of over N2 trillion in total deposits suggests a substantial reduction in available liquidity in the banking system. “This is a marked change from previous months, as deposits in Nigeria have been on a general upward trend since August 2024.
The decline of Demand Deposits (-4.30%) could indicate that businesses or individuals are withdrawing funds from their accounts, likely due to a need for liquidity, an increase in expenditure, or a shift in investment strategy. The decline of Domiciliary Deposits (-2.40%) could be the result of changes in foreign exchange dynamics, such as fluctuations in remittances.
“In January 2025, individuals led the ownership of deposits with 45.20% of the total bulk deposits in the banking system. This suggests that Nigerian consumers, whether through personal savings accounts, current accounts, or other forms of deposit, hold a significant portion of the liquidity in the banking system.
Private corporates hold 42.07 per cent of total deposits, indicating a significant role in the banking system, especially considering their lower percentage compared to individual ownership.
Therefore, I call for carefully balanced monetary policy decisions in order to maintain consumer confidence in the banking system.” Indeed, according to a recent report by Unity Bank, the rising cost of living in the country is leading to an increase in cash withdrawals by consumers.
The report said that consumers are grappling with diminished purchasing power, occasioned by persistent inflation and exchange rate volatility, adding that this may negatively impact the retail and hospitality sectors as well as some Small and Medium Enterprises (SMEs).
Specifically, the report stated: “Consumers face diminished purchasing power due to persistent inflation and currency volatility. Many are withdrawing more cash, likely as a response to rising costs. “Reduced discretionary spending may impact retail, hospitality, and SMEs dependent on consumer demand.
