Nigeria’s money supply has expanded sharply over a two-year period, reaching a record N117.8 trillion and signalling a major liquidity buildup across the economy. Fresh figures from the Central Bank of Nigeria show that the broad money indicator, M3, rose by 75.9% between September 2023 and September 2025.
The data point to a system awash with cash at a time businesses and households continue to grapple with inflationary pressure and unstable exchange rates.
According to the bank’s Money and Credit report, money supply climbed to N117.783 trillion in September 2025, up from N66.944 trillion recorded in the same month of 2023. The trend reflects what analysts in previous public comments have often described as excess liquidity pushing through the financial system.
A further breakdown shows that the momentum had already picked up earlier in the year. By the first half of 2025, money supply grew by 80.6%, rising to N117.250 trillion, compared to N64.906 trillion in the corresponding period of 2023. The first quarter of 2025 showed an even stronger leap, with a 112% rise to N115.815 trillion from N54.628 trillion in Q1 2023.
Alongside the liquidity surge, banks’ credit exposure to the government also stood at notable levels. Credit to government reached N24.158 trillion in September 2025, showing a 9.1% increase from N22.137 trillion in 2023.
However, short-term movements tell a more mixed story. In the first half of 2025, credit to government declined by 30.6% to N21.662 trillion, down from N31.233 trillion. The first quarter also showed a drop of 10.7%, falling to N24.589 trillion from N27.529 trillion in Q1 2023.
On a year-on-year basis, banks’ lending to government slid by 38.8% as of September 2025, down from N39.5 trillion the previous year.
The contrasting patterns reflect both the government’s borrowing needs and the banking sector’s shifting liquidity positions. Government borrowing from domestic lenders has become a recurring feature of fiscal management, with credit often used to cover budget gaps and ongoing financial commitments.
Financial commentators have long warned that rapid money supply growth, if unmatched by real economic output, poses inflationary risks. In a past assessment, the Executive Vice Chairman of High Cap Securities Limited, David Adonri, noted that expanding money supply could influence interest rates and spending patterns. According to him, “Increasing the money supply in Nigeria can stimulate economic growth by lowering interest rates and encouraging spending and investment.”
He also cautioned that aggressive monetary expansion without adequate controls may trigger runaway inflation. “If the increase is not managed carefully and outpaces economic growth, it often leads to inflation, where there is ‘too much money chasing too few goods’,” he said.
He warned that such situations often create higher consumer prices, balance-of-payment pressures, and reduced industrial capacity utilisation.
On government borrowing, Adonri explained that rising credit levels usually show a growing dependence on the financial sector for funding national obligations. “When government credit levels rise, it indicates that it is increasingly borrowing from the financial sector, particularly from domestic banks and other lenders,” he said, noting that the funds typically go into infrastructure, social programmes, or budget deficit financing.
