Nigeria’s Money Supply Skyrockets to N99.23 Trillion in May

Nigeria’s money supply (M3) soared to an all-time high of N99.23 trillion in May 2024, according to data released by the Central Bank of Nigeria (CBN).

This significant increase comes despite the CBN’s efforts to tighten monetary policy.

M3, which is a broad measure of the money supply within an economy, rose by 2.33 percent from N96.97 trillion in April 2024 and by 7.46 percent from N92.34 trillion in March 2024.

M3 includes various types of liquid assets that are readily available for spending or investment, such as currency, checking deposits, and savings deposits up to two years, as well as larger time deposits, institutional money market funds, and short-term repurchase agreements.

The unprecedented rise in M3 highlights a complex economic landscape where monetary tightening measures by the CBN have not curbed the increase in liquid assets within the economy.

This raises questions about the effectiveness of the current monetary policies.

Also, the data shows that the currency in circulation increased by 1.02 percent to N3.96 trillion in May 2024 from N3.92 trillion in April 2024.

On a quarterly basis, currency in circulation rose by 2.59 percent from N3.86 trillion in March of the same year.

Credit to the private sector also saw an uptick, reaching N74.31 trillion in May 2024, a 1.92 percent rise from N72.91 trillion in April 2024.

This increase in credit indicates ongoing economic activity and potential growth opportunities for businesses, even as the broader money supply continues to expand.

Currency outside banks rose to N3.70 trillion in May 2024, marking a 2.77 percent increase compared to N3.60 trillion in April 2024.

This suggests a higher demand for cash transactions despite the growing emphasis on digital and cashless payment systems.

The surge in Nigeria’s money supply comes amid various economic reforms and policies aimed at stabilizing the nation’s economy.

CBN reforms have driven investment inflows to a four-year high, showcasing a renewed investor confidence in the Nigerian market.

However, this rise in money supply could pose challenges, such as potential inflationary pressures, which the CBN will need to address.

In related news, a report indicates that several Nigerian states, including Kogi, Kano, and Oyo, may struggle to pay the new minimum wage, highlighting ongoing fiscal challenges at the state level.

Meanwhile, the aviation sector is experiencing issues as airlines’ staff and touts are capitalizing on plane shortages, further complicating the economic environment.

As Nigeria navigates these complexities, the record high in money supply underscores the need for careful economic management and policy adjustments to ensure sustainable growth and stability.