Nigeria’s money supply contracted for the first time in 2025, dropping to N110.32 trillion in February from N110.94 trillion in January, marking a 0.56 per cent decline.
This development comes amid the Central Bank of Nigeria’s (CBN) liquidity management strategies, reflecting the ongoing effects of monetary tightening and exchange rate stabilization efforts.
Despite the recent dip, the money supply remains 15.45 per cent higher year-on-year, compared to N95.56 trillion in February 2024. This highlights significant monetary expansion over the past year despite the recent slowdown.
The M3 money supply, which includes net foreign assets (NFA) and net domestic assets (NDA), offers a holistic view of the nation’s monetary landscape. February’s contraction reflects shifts in both foreign reserves and domestic credit flows.
Conversely, net domestic assets (NDA) increased by 3.21 per cent, rising to N77.97 trillion in February from N75.55 trillion in January. This suggests continued expansion in government and private sector credit.
On a year-on-year basis, NFA has surged by over 337 per cent from just N7.41 trillion in February 2024, reflecting the impact of exchange rate liberalization and increased foreign capital inflows over the past year.
Broad money supply, M2, which excludes certain large time deposits and institutional instruments, declined marginally to N110.31 trillion from N110.93 trillion in January, mirroring the 0.56 per cent contraction seen in M3.
However, M2 remains 17.39 per cent higher year-on-year, compared to N93.97 trillion in February 2024, reflecting overall monetary expansion due to government spending and fiscal policies.
According to Dr. Emmanuel Adewale, an economist at the Lagos Business School, the latest figures suggest a shift in monetary policy effectiveness.
“The sharp rise in foreign assets over the past year is now beginning to level off, possibly due to stabilized forex inflows or CBN’s recent interventions in the official forex market. This will have implications for inflation and exchange rate stability in the coming months.”
