Nigeria’s broad money supply (M3) surged to N114.22 trillion in March 2025, marking a 24 per cent year-on-year increase from N92.19 trillion recorded in the same month of 2024, according to fresh data released by the Central Bank of Nigeria (CBN).
The sharp rise in liquidity comes against the backdrop of mounting inflationary pressures, with headline inflation accelerating to 24.23 per cent in March, up from 23.18 per cent in February, according to figures from the National Bureau of Statistics (NBS).
On a month-on-month basis, M3 rose by 3.2 per cent from N110.71 trillion in February, driven primarily by a robust 38.9 per cent jump in net foreign assets (NFA) to N45.17 trillion.
Analysts attribute this increase to improved capital inflows and stronger external liquidity, aided by better balance of payments performance.
Conversely, net domestic assets (NDA) declined by 11.7 per cent to N69.05 trillion, signalling tightening liquidity conditions on the domestic front.
In the first quarter of 2025, M3 expanded from N111.11 trillion in January to N114.22 trillion by March, a 2.8 per cent quarterly rise.
During the same period, net foreign assets recorded a significant gain of N11.98 trillion, while net domestic assets shrank by 11.4 per cent, suggesting the CBN may have pursued liquidity tightening measures such as open market operations or reduced credit extension to the government.
Commenting on the development, Dr. Tunde Ajayi, a financial economist at the University of Lagos, warned that the rapid expansion of money supply—despite the CBN’s ultra-tight Cash Reserve Ratio (CRR) of 50 per cent—is “worrisome” and could deepen Nigeria’s inflation woes.
“The fact that money supply continues to rise, even with a globally unprecedented CRR, points to strong external liquidity flows but also highlights structural weaknesses in monetary transmission,” Ajayi said. “If not properly managed, this could fuel higher inflation and further erode consumers’ purchasing power.”
Similarly, Bimpe Lawal, Chief Investment Officer at Zenith Capital Partners, noted that the surge in net foreign assets is a double-edged sword.