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Nigeria’s money supply recorded its first decline in 2025, falling by 0.56% to ₦110.32tn in February from ₦110.94tn in January, according to data from the Central Bank of Nigeria (CBN).
This drop comes as the apex bank intensifies efforts to manage liquidity, following its monetary tightening stance and foreign exchange adjustments aimed at stabilizing the naira.
Key Highlights
- Month-on-Month Decline:
- February 2025: ₦110.32tn
- January 2025: ₦110.94tn
- Change: -0.56%
- Year-on-Year Increase:
- February 2024: ₦95.56tn
- February 2025: ₦110.32tn (+15.45%)
Despite the recent contraction, money supply remains 15.45% higher than the corresponding period last year, reflecting the impact of monetary and fiscal policies.
Breakdown of Money Supply Components
- Net Foreign Assets (NFA):
- February 2025: ₦32.34tn
- January 2025: ₦35.39tn
- Change: -8.62% (-₦3tn)
The significant drop in net foreign assets may be attributed to:
- Lower external reserves
- Increased forex interventions to stabilize the naira
📊 Year-on-Year NFA Growth: ₦32.34tn (2025) vs ₦7.41tn (2024) → +337%
This reflects the impact of exchange rate reforms and foreign capital inflows over the past year.
- Net Domestic Assets (NDA):
- February 2025: ₦77.97tn
- January 2025: ₦75.55tn
- Change: +3.21%
The increase indicates continued credit expansion in the local economy despite the CBN’s monetary tightening.
📉 Year-on-Year NDA Decline:
February 2024: ₦88.15tn → February 2025: ₦77.97tn (-11.54%)
This suggests a possible reallocation of resources within the financial system due to evolving monetary policies.
- Broad Money Supply (M2):
- February 2025: ₦110.31tn
- January 2025: ₦110.93tn
- Change: -0.56%
Despite the monthly decline, M2 increased by 17.39% year-on-year, up from ₦93.97tn in February 2024, driven by:
- Increased government spending
- Fiscal stimulus measures
- Narrow Money Supply (M1):
- February 2025: ₦37.57tn
- January 2025: ₦36.77tn
- Change: +2.18%
📊 Year-on-Year Growth: ₦37.57tn (2025) vs ₦30.28tn (2024) → +24.07%
The rise in M1 suggests higher demand for cash and liquidity due to:
- Inflationary pressures
- Currency volatility
Implications for Monetary Policy
The decline in overall money supply—despite the rise in domestic credit and narrow money—reflects a shift in liquidity structure:
- Reduced Foreign Assets: Weighing down M3 as foreign inflows stabilize.
- Domestic Credit Expansion: Fueling M1 growth amid rising transactional needs.
With inflation remaining elevated and the naira showing signs of stability, the CBN may leverage this slight contraction to:
- Fine-tune its monetary policy tools.
- Balance between inflation control and economic growth.
These figures are expected to shape discussions at the next Monetary Policy Committee (MPC) meeting as the CBN continues to navigate the country’s evolving macroeconomic environment.
