- Nigeria’s broad money supply declined for the second time in 2025.
- The money supply fell slightly to N119.01 trillion in May 2025.
- Year-on-year, the money supply grew by 19.9 percent from last year.
- Net foreign assets decreased significantly from April’s figures.
- Domestic assets increased, mitigating the foreign asset drop.
Declining Money Supply Reflects Ongoing Adjustments
Nigeria’s broad money supply has recorded a decline for the second time this year, a development highlighted in fresh data released by the Central Bank of Nigeria (CBN). The recent figures show that in May 2025, the money supply fell slightly to N119.01 trillion, down from April’s N119.30 trillion. This represents a month-on-month contraction of N292.75 billion or about 0.25 percent, following an earlier decline noted in February when the supply had slipped to N110.32 trillion from N110.94 trillion in January.
Year-on-Year Growth Shows Strong Monetary Expansion
Despite this decline, the money supply continues to hover near record highs, primarily due to earlier surges in liquidity and ongoing adjustments to monetary policy. Interestingly, while month-on-month comparisons are down, year-on-year growth is more pronounced. The broad money supply has expanded by N19.77 trillion from May 2024, indicating a robust 19.9 percent increase from a baseline of N99.24 trillion last year, underscoring the scale of monetary expansion in the past 12 months.
Shifts in Liquidity Structure and Asset Positions
A closer examination of the data reveals a significant shift within Nigeria’s liquidity structure. Net foreign assets, which had previously risen to N49.87 trillion in April, saw a sharp decline to N45.81 trillion in May — a drop of N4.05 trillion or approximately 8.1 percent. This contraction signals a possible weakening in Nigeria’s external asset standing, likely connected to reductions in foreign reserves or decreased inflows of capital. Conversely, net domestic assets recorded an increase, climbing from N69.43 trillion to N73.19 trillion during this same period, reflecting a rise of N3.76 trillion or 5.4 percent. This uptick in domestic liquidity has counterbalanced the drop in foreign assets, helping to prevent a more severe contraction in the overall money supply, even as the Central Bank continues its efforts to tighten financial conditions. For instance, both measures of M2 and M1 have seen declines this past month, indicating a tightening trend in the monetary landscape.
In summary, Nigeria’s broad money supply has experienced its second decline this year, with a noticeable contraction in foreign assets while domestic liquidity shows resilience. Year-on-year comparisons illustrate an ongoing trend of monetary expansion despite recent month-on-month declines. The actions of the Central Bank of Nigeria are starting to have an impact, and the future of liquidity management will likely hinge on navigating fiscal challenges and exchange rate fluctuations.