Demand deposits have jumped by 206.83 per cent from N9.67tn in May 2019 to N29.67tn this year’s May, according to data from the Central Bank of Nigeria’s website.
According to the CBN data, the country’s demand deposits increased by 9.31% between May 2019 and May 2020 to N10.57 trillion, amid global economic uncertainty induced by the COVID-19 epidemic.
Growth continued into 2021 and beyond, topping N20 trillion in early 2023.
Factors contributing to growth include increased economic activity, government stimulus initiatives, and more liquidity in the financial sector.
an economist with Lotus Beta Analytics, Shedrach Israel said that the spike in demand deposits indicated strong consumer confidence and liquidity in Nigeria’s financial sector.
He added, “It reflects heightened economic activities, investments, and savings mobilisation within the country, supporting lending activities and stimulating economic growth.”
However, the rising trend in demand deposits poses concerns for monetary authorities, needing careful monitoring to guarantee financial stability, moderate inflationary pressures, and support long-term economic growth.
Experts emphasized that, while the increase in demand deposits indicated a resilient banking sector, it also necessitated cautious management to reduce possible dangers and assure long-term economic development.
An analyst at Phemmy Gracey Limited, Olorunfemi Idris, noted that the increase in demand deposits had important implications for the economy, providing banks with more funds to lend and potentially boosting credit availability and economic growth.
However, he expressed concern about inflation and the potential increase in the money supply, which may lead to economic instability if not adequately managed.
