Nigeria Records Decline in Broad Money Supply to N123.36tn

Nigeria’s broad money supply (M3) declined to N123.36 trillion in January, down from N124.4 trillion recorded in December, according to the latest monetary statistics released by the Central Bank of Nigeria.

Broad money, also known as M3, includes currency circulating outside banks, demand deposits, savings and time deposits, as well as foreign currency deposits.

The month-on-month contraction suggests a moderation in liquidity conditions at the start of the year, even though overall money supply remains significantly higher compared to the corresponding period last year.

Read Also:

• CNG Stations Rollout Lags 2025 Target Despite $2bn Investment
• Modular Refineries Supply Only Fraction of Nigeria’s Diesel Needs – Data

Monetary aggregates reflect a mixed pattern across domestic and external liquidity components:

• Broad money (M3) decreased to N123.36 trillion from N124.4 trillion.
• Narrow money (M2), comprising currency in circulation and demand deposits, also fell to N123.35 trillion from N124.4 trillion.
• Net foreign assets (NFA) declined sharply to N29.6 trillion from N31.5 trillion, indicating reduced foreign currency holdings and possible pressure on external reserves.
• Net domestic assets (NDA) increased to N93.76 trillion from N92.9 trillion, pointing to continued credit expansion within the domestic economy, including lending to both government and private sector entities.

Despite the marginal monthly decline, M3 remains well above the approximately N111.11 trillion recorded in January of the previous year, underscoring sustained monetary expansion on a year-on-year basis.

Policy backdrop and implications

The movement in money supply aligns with recent monetary policy decisions by the apex bank.

The Monetary Policy Committee previously reduced the Monetary Policy Rate (MPR) by 50 basis points to 27 per cent, in a bid to stimulate economic activity amid easing inflationary pressures. The committee later retained the rate at 27 per cent, adopting a cautious approach to balance price stability with growth objectives.

Analysts suggest the January contraction may reflect tighter liquidity management measures, seasonal adjustments common at the beginning of the year, or more conservative lending behaviour by financial institutions.

The decline in net foreign assets could also signal ongoing adjustments in the external sector, including foreign exchange interventions and reserve management strategies.

Overall, the figures highlight the delicate interplay between domestic credit growth, reserve management, and monetary tightening efforts in shaping Nigeria’s liquidity environment.