Nigeria’s broad money supply rose to ₦114.22 trillion in March 2025, defying the Central Bank of Nigeria’s (CBN) monetary tightening measures implemented in the preceding quarter.
The CBN’s latest Money and Credit Statistics for Q1 2025 show that this figure marks a 24 percent year-on-year increase from ₦92.19 trillion recorded in March 2024. This growth occurred despite the Monetary Policy Committee’s decision to set the Cash Reserve Ratio (CRR) at a record-high 50 percent.
On a monthly basis, the money supply increased by 3.2 percent, up from ₦110.71 trillion in February.
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The surge was accompanied by a sharp 38.9 percent rise in net foreign assets, which climbed to ₦45.17 trillion—likely reflecting stronger capital inflows and potential revaluation gains. Conversely, net domestic assets declined by 11.7 percent to ₦69.05 trillion, suggesting tighter liquidity conditions within the domestic financial system.
Despite efforts to rein in inflation, recorded at 24.23 percent in March, and curb liquidity through what is considered the highest CRR globally, Nigeria’s monetary base has continued to expand.
Foreign Asset Accumulation and Government Credit Likely Fuel Broad Money Growth
The increase in Nigeria’s broad money supply may be largely driven by the accumulation of foreign assets and rising government credit.
Data from the Central Bank of Nigeria (CBN) reveals that in the first quarter of 2025, M3 expanded by 2.8 percent, from ₦111.11 trillion in January to ₦114.22 trillion by March.
Additionally, the CBN reported a notable rise in the volume of currency circulating outside the banking system. As of March 2025, ₦4.6 trillion—representing 91.9 percent of the total ₦5 trillion in circulation—was held outside of banks.
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This reflects a 26.7 percent increase compared to the ₦3.63 trillion outside the banks in March 2024, when the total currency in circulation stood at ₦3.87 trillion.
The preference for physical cash remained strong throughout Q1 2025. In January, ₦4.74 trillion (90.5 percent of total currency) was held outside the banks, followed by ₦4.52 trillion (89.6 percent) in February.
Despite these liquidity trends, the CBN’s Monetary Policy Committee (MPC) held firm on its stance in February, retaining the benchmark interest rate at 27.50 percent and maintaining the Cash Reserve Ratio at 50 percent, along with other monetary policy tools.
The MPC is scheduled to convene again on May 19 and 20, 2025.
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