By Springnewsng Media Limited
March 27, 2025

Nigeria’s money supply (M2) surged by 17.3% year-on-year (YoY) to N110.3 trillion in February 2025, up from N93.97 trillion in the same period last year, according to the latest Money and Credit Statistics released by the Central Bank of Nigeria (CBN).http://Central Bank of Nigeria (CBN).

Despite this growth, credit to the economy dropped by 13.4% YoY to N99.4 trillion, reflecting a decline in lending to both the government and the private sector.

Breakdown of Money Supply Growth

The increase in broad money supply (M2) was driven by positive trends in its key components:

• Quasi-Money: Savings deposits, time deposits, and other near-money assets grew by 14% YoY to N72.7 trillion from N63.7 trillion in February 2024.
• Demand Deposits: Increased by 22.8% YoY to N33.05 trillion from N26.9 trillion.
• Currency Outside Banks: Rose by 32% YoY to N4.51 trillion from N3.41 trillion.
• Narrow Money (M1): Grew by 21.7% YoY to N36.9 trillion from N30.3 trillion.

Decline in Credit to the Economy

While money supply expanded, credit to the economy fell significantly due to reduced lending to both the public and private sectors.

• Credit to Government: Declined by 21.8% YoY, dropping from N33.92 trillion in February 2024 to N26.5 trillion in February 2025. However, it saw an 8% month-on-month (MoM) increase from N24.5 trillion in January 2025.
• Credit to the Private Sector: Fell by 7.4% YoY to N74.9 trillion from N80.9 trillion in February 2024. It also declined 1.6% MoM from N74.9 trillion in January 2025.

Implications for the Economy

The increase in money supply indicates a higher level of liquidity in the economy, which could fuel inflationary pressures if not matched by production growth. Meanwhile, the decline in credit to the private sector may slow business expansion and economic growth.

Experts suggest that while government borrowing remains a key driver of money supply growth, its impact on overall economic stability will depend on how effectively these funds are utilized.

The CBN is expected to continue monitoring liquidity levels while implementing policies to balance inflation control with economic growth stimulation.