- Nigeria’s money supply dropped to N110.32 trillion in February 2025
- An analysis of the money supply components showed that net foreign assets declined by 8.62 per cent, while net domestic assets increased by 3.21 per cent
- Broad money supply declined to N110.31 trillion, while narrow money increased to N37.57 trillion in February 2025
Nigeria’s money supply (M3) declined for the first time in 2025, dropping from N110.94 trillion in January to N110.32 trillion in February 2025.
The figure represents a 0.56 per cent decline month-on-month and a 15.45 per cent increase year-on-year compared to the N95.56 trillion recorded in February 2024.
The year-on-year change indicates that Nigeria’s monetary base has expanded over the past 12 months despite the recent slowdown.
M3, which measures the total amount of money in an economy, including net foreign assets (NFA) and net domestic assets (NDA), provides a holistic picture of Nigeria’s monetary dynamics.
The slight decline in February reflects changes in both foreign reserves and domestic credit flows.
Analysis of foreign and domestic assets movement in February
An analysis of the M3 components showed that net foreign assets declined by 8.62 per cent in February to N32.34 trillion, down from N35.39 trillion in January.
The decline in foreign assets is a likely indication of reduced external reserves or increased foreign exchange interventions by the Central Bank of Nigeria (CBN) aimed at stabilising the naira.
However, on a year-on-year basis, net foreign assets saw a 337 per cent increase from N7.41 trillion in February 2024.
Net domestic assets, on the other hand, increased by 3.21 per cent month-on-month from N75.55 trillion in January to N77.97 trillion in February.
The increase signals sustained credit expansion within the domestic economy, particularly from government and private sector lending.
However, net domestic assets dropped from the N88.15 trillion recorded in February 2024.
Broad money slightly declined to N110.31 trillion
Broad money supply (M2), which excludes certain large time deposits and institutional instruments, declined by 0.56 per cent in February.
M2 dropped from N110.93 trillion in January to N110.31 trillion in February 2025.
The figure for M2 in February represents a 17.3 per cent increase compared to February 2024, when it stood at N93.97 trillion.
Narrow Money (M1) increases to N37.57 trillion
Contrary to the downward trend of other categories of money, narrow money (M1), which includes currency in circulation and demand deposits, recorded a 2.18 per cent increase in February.
Narrow money increased from N36.77 trillion in January to N37.57 trillion in February.
The increase suggests increased liquidity in the hands of households and businesses, which may be due to higher transactional demand and ongoing fiscal disbursements.
On a year-on-year basis, M1 increased by 24.07 per cent in February 2025 from the N30.28 trillion recorded in February 2024.
Decline in M3 may influence monetary policy decision
Going by the recent moderation in the inflation rate, which dropped for the second consecutive month to 23.18 per cent in February from 24.28 per cent in January, and the relative stability in the foreign exchange market, the moderation in M3 could sway the position of monetary authorities.
The decline in M3 may influence the upcoming Monetary Policy Committee (MPC) meeting as many economic analysts have called for the tapering of the Monetary Policy Rate (MPR) and other monetary decisions following the moderation of inflation.
It should be noted that the CBN hiked the MPR six consecutive times in 2024 as part of its tight monetary stance to curb soaring inflation, which reached 34.80 per cent in December 2024.
CBN says Nigerians withdrew N365.38 billion in November 2024
Meanwhile, TheRadar earlier reported that the Central Bank of Nigeria (CBN) said Nigerians withdrew N364.38 billion from banks in November 2024 amid the cash scarcity witnessed in many parts of the country.
This was according to the latest data from the Money and Credit Statistics of the CBN, which also stated that currency outside banks increased to N4.65 trillion from N4.29 trillion in October, representing an 8.5 per cent month-on-month increase.
