Nigeria’s broad money supply (M3) declined for the second time in 2025, falling slightly to ₦119.01 trillion in May, according to fresh data from the Central Bank of Nigeria (CBN). The figure represents a month-on-month contraction of ₦292.75 billion or 0.25 per cent from ₦119.30 trillion in April.
The first decline this year was recorded in February, when the figure fell from ₦110.94 trillion in January to ₦110.32 trillion. Despite the recent pullbacks, money supply remains close to record levels, reflecting the lingering effects of past liquidity expansion and the gradual impact of monetary policy tightening.
On a year-on-year basis, the increase is more pronounced. Total money supply grew by ₦19.77 trillion from ₦99.24 trillion in May 2024, marking a 19.9 per cent rise. The data underscores the scale of monetary expansion that has taken place over the past 12 months, even as the CBN now shifts toward a more restrictive policy stance.
A closer look at the drivers shows a shift in liquidity composition. Net foreign assets, which contributed significantly to the April increase, declined sharply by ₦4.05 trillion or 8.1 per cent, dropping to ₦45.81 trillion in May from ₦49.87 trillion. Analysts attribute the fall to weakening FX reserves or reduced external inflows.
Meanwhile, net domestic assets rose to ₦73.19 trillion in May, up ₦3.76 trillion or 5.4 per cent from April. The increase helped cushion the overall drop in money supply and suggests stronger domestic liquidity, possibly from higher government borrowing or increased banking system credit.
M2, a narrower measure of money that excludes certain institutional holdings, also edged lower to ₦118.99 trillion in May from ₦119.28 trillion in April — a decline of ₦283 billion or 0.24 per cent. Similarly, narrow money (M1), which includes cash and demand deposits, dropped from ₦41.00 trillion to ₦40.38 trillion, a 1.5 per cent decrease.
The reduction points to a tightening in the most liquid components of the monetary base.
Despite the monthly declines, M1 remains significantly higher than a year ago — up 20.9 per cent from ₦33.38 trillion in May 2024 — indicating that liquidity levels remain elevated by historical standards.
The broader trends show that while total money supply has grown by almost ₦20 trillion over the past year, this growth was largely driven by the expansion of Nigeria’s foreign assets. Net foreign assets rose from ₦15.34 trillion in May 2024 to ₦45.81 trillion in May 2025, a jump of over ₦30 trillion or 198%. This likely reflects increased oil receipts, improved external financing, and accumulation of FX reserves.
In contrast, net domestic assets declined by ₦10.71 trillion or 12.8% over the same period, falling from ₦83.90 trillion to ₦73.19 trillion. The contraction indicates tighter domestic liquidity conditions, possibly linked to reduced deficit financing and the CBN’s tightening stance.
With elevated interest rates and more aggressive open market operations now in place, the decline in money supply suggests early traction in the central bank’s efforts to curb excess liquidity and contain inflation.
