The money supply flowing into Nigeria’s economy has substantially risen, reaching a record N117.8 trillion in two years, a period characterized by increasing bank credit extended to the government.

Findings from the Central Bank of Nigeria data, as reported by Vanguard, reveal that the broad money supply, M3, expanded by 75.9 per cent to N117.783 trillion in September 2025 from N66.944 trillion recorded in the same month of 2023, indicative of excess liquidity in the economy.

Over the same two-year span, banks’ credit to the government also climbed to a record N24.158 trillion in September 2025.

According to the CBN’s Money and Credit report, credit extended to the government increased by 9.1% in two years ended September 2025, up from N22.137 trillion in September 2023. Analysts state that this increase highlights the growing reliance on bank financing by the government.

A detailed review of the money supply figures for the two-year period shows significant growth across earlier quarters: in the first half of 2025, money supply grew by 80.6% to N117.250 trillion from N64.906 trillion in the same period 2023; and in the first quarter of 2025 ), it rose by 112% to N115.815 trillion from N54.628 trillion in Q1’23.

Conversely, a review of banks’ credit to the government within the two-year period presents a varied picture: in H1’25, the credit declined by 30.6% to N21.662 trillion from N31.233 trillion; and in Q1’25, it nosedived by 10.7% to N24.589 trillion from N27.529 in Q1’23.

On a Year-on-Year basis, the data shows that banks’ credit to the government recorded a 38.8\% decline in September 2025 to N24.2 trillion from N39.5 trillion in September 2024.

Commenting on the consequences of the rising money supply, David Adonri, an Analyst and Executive Vice Chairman at High Cap Securities Limited, stated: “Increasing the money supply in Nigeria can stimulate economic growth by lowering interest rates and encouraging spending and investment.” He cautioned, however, that “However, if the increase is not managed carefully and outpaces economic growth, it often leads to inflation, where there is ‘too much money chasing too few goods’.” He further warned: “This can lead to higher prices for consumers and negative impacts such as balance of payment deficits and decreased industrial capacity utilization.”

Regarding the government’s rising reliance on bank credit, Adonri explained: “When government credit level rise, it indicates that it is increasingly borrowing from the financial sector, particularly from domestic banks and other lenders.” He concluded: “This rise in borrowing generally reflects an increase in government debt, as funds are sought for financing various operations such as infrastructure projects, social programmes, and budget deficit coverage.”