By John Audu.
Nigeria’s Money Supply (M2) rose by 18.3% year-on-year to N110.97 trillion in January 2025, up from N93.77 trillion in the same period of 2024, driven by a notable increase in savings in various investment instruments by Nigerians.
The Central Bank of Nigeria (CBN) revealed this in its Money and Credit Statistics data released yesterday, highlighting that the increase in money supply was largely fueled by a 21% surge in quasi-money, which includes savings accounts, treasury bills, money market instruments, and foreign currency deposits. Quasi-money grew to N74.07 trillion from N61.2 trillion in January 2024.
Additionally, demand deposits rose by 13.6% year-on-year to N32.15 trillion in January 2025, compared to N28.3 trillion in January 2024. Currency outside banks also saw a significant increase of 44.5% year-on-year, reaching N4.74 trillion from N3.28 trillion in the previous year. Narrow money (M1) grew by 16.7% year-on-year to N36.9 trillion from N31.6 trillion.
The rise in money supply coincided with a 6% quarter-on-quarter increase in Nigeria’s total public debt, which reached N142.3 trillion in the third quarter of 2024, according to the Debt Management Office (DMO). The CBN data indicated that credit to the government surged by 54% year-on-year to N24.51 trillion in January 2025, up from N23.51 trillion in January 2024.
In contrast, credit to the private sector experienced a decline of 2.09% year-on-year, falling to N74.9 trillion in January 2025 from N76.5 trillion in January 2024. Consequently, net domestic credit decreased by 0.5% year-on-year to N99.4 trillion from N99.9 trillion in the same period of 2024.
Analysts at Cowry Asset Management Limited commented that the rising public debt figures were primarily driven by a widening fiscal deficit due to government budget shortfalls and the ongoing depreciation of the naira. They noted that domestic debt issuance by the DMO to finance fiscal gaps significantly contributed to the increasing debt stock.
The analysts cautioned that Nigeria’s fiscal position remains precarious, posing heightened risks to economic stability unless structural reforms and revenue diversification efforts yield tangible results.
