Nigeria’s broad money supply surged to ₦114.22 trillion in March 2025, according to the latest data from the Central Bank of Nigeria, raising concerns about the effectiveness of the apex bank’s aggressive tightening measures.
The March figure reflects a 24% year-on-year increase from ₦92.19 trillion in March 2024, and a 3.2% month-on-month rise from ₦110.71 trillion in February 2025. This expansion comes despite the CBN’s historic increase of the Cash Reserve Ratio to 50%, the highest in the world, as part of broader efforts to rein in inflation and mop up excess liquidity.
The growth was primarily driven by a sharp rise in net foreign assets, which rose 38.9% to ₦45.17 trillion. Analysts say this points to strong capital inflows and potential revaluation gains. However, net domestic assets dropped 11.7% to ₦69.05 trillion, indicating tightened liquidity conditions within Nigeria’s financial system.
Despite policy tightening, the monetary base has continued to expand. Analysts suggest that increased foreign asset accumulation and rising government credit may be offsetting the CBN’s contractionary stance.
Between January and March 2025, broad money supply (M3) rose by 2.8%, climbing from ₦111.11 trillion to ₦114.22 trillion.
One of the most striking elements in the CBN’s report is the high volume of currency outside the banking system. As of March, ₦4.6 trillion of the total ₦5 trillion currency in circulation was held by the public—91.9%. This marks a 26.7% increase from ₦3.63 trillion outside banks in March 2024.
The trend of physical cash dominance was consistent through Q1 2025. In January, ₦4.74 trillion (90.5%) of circulating currency was outside the banks, while February recorded ₦4.52 trillion (89.6%).
Analysts attribute this to persistent issues with digital banking platforms, distrust in formal financial institutions, and the continued strength of Nigeria’s informal economy. Failed transactions, ATM outages, and customer service complaints have all contributed to the public’s preference for physical cash.
Nigeria’s inflation remains elevated. Headline inflation climbed to 24.23% in March from 23.18% in February, while month-on-month inflation surged 3.90%, according to the National Bureau of Statistics.
The CBN’s Monetary Policy Committee maintained the Monetary Policy Rate at 27.5% in its February meeting. This rate, now the fifth highest globally, trails only Venezuela (59.4%), Turkey (45%), Zimbabwe (35%), and Argentina (29%).
CBN MPC member and economist Mustapha Akinkunmi noted that Nigeria’s interest rate was raised six times in 2024 alone. In a personal statement following the MPC’s 299th meeting in February, Akinkunmi said the elevated MPR reflects the country’s ongoing battle with inflation, currency volatility, and macroeconomic instability.
The International Monetary Fund has endorsed the CBN’s tightening approach. In its statement following the Article IV consultation held from April 2 to 15, the IMF urged the bank to maintain a tight monetary stance.
“The MPC’s data-dependent approach has served Nigeria well and will help navigate elevated macroeconomic uncertainty,” the IMF said. The Fund also recommended that the CBN announce a formal disinflation path to better anchor market expectations and strengthen policy credibility.
With the next MPC meeting scheduled for May 19–20, pressure is mounting on policymakers to balance inflation control with economic growth. As money supply continues to expand and inflationary pressures build, Nigeria’s central bank faces a critical test of its monetary strategy in the months ahead.
