- Nigeria’s money supply dropped to N119.01tn in May 2025.
- This represents a month-on-month decline of 0.25%.
- Broad money supply increased by 19.9% year-on-year from May 2024.
- Net foreign assets experienced a decline of 8.1%.
- Net domestic assets rose by 5.4% during the same period.
Money Supply in Nigeria Experiences Unlikely Drop
In a notable development, Nigeria’s broader money supply has seen its second decline of the year, dipping to N119.01 trillion in May 2025, according to recently published figures from the Central Bank of Nigeria. This represents a reduction of N292.75 billion, or 0.25 percent, from the previous figure of N119.30 trillion recorded in April. Prior to this decrease, the first contraction of 2025 occurred in February, with the money supply falling to N110.32 trillion from N110.94 trillion in January, indicating a concerning pattern for the economic indicators relevant to the country’s financial landscape.
Year-on-Year Trends Show Remarkable Growth
Even with the ongoing declines, the money supply remains significantly high, largely due to the lingering effects of previous liquidity increases alongside shifting monetary policies. When analyzed on a year-on-year basis, the growth is considerably more pronounced. In fact, broad money supply surged by N19.77 trillion from May 2024’s figure of N99.24 trillion, which translates to a striking 19.9 percent increase. This substantial growth underscores the considerable monetary expansion that has taken place within the last year, raising questions about the sustainability of this trend and its implications.
Shifts in Domestic and Foreign Asset Structures
A more detailed breakdown of the data reveals transformations in Nigeria’s liquidity sources. Net foreign assets, previously at N49.87 trillion in April, took a steep drop to N45.81 trillion in May, marking a sharp loss of N4.05 trillion, or 8.1 percent. This decline may reflect a weakening external asset position, possibly influenced by reductions in foreign reserves. Conversely, net domestic assets increased comparatively from N69.43 trillion to N73.19 trillion within the same time frame, a rise of N3.76 trillion, or 5.4 percent. While the increase in domestic liquidity has partially mitigated the fall in foreign assets, avoiding a more drastic contraction in the overall money supply suggests a complex interplay at work within the country’s financial system.
In summary, Nigeria’s money supply has recorded a second decline of the year, with the Central Bank’s data pointing to significant shifts in liquidity sources. The annual growth despite the recent downturn raises questions about the balance between domestic and foreign assets. As the Central Bank of Nigeria navigates these uncertainties, the path forward will undoubtedly influence fiscal dynamics and macroeconomic stability.
