Nigeria’s broad money supply reached a historic high of N93.72 trillion in January 2024, marking an impressive ascent.
This figure represents a remarkable 76% surge from the N53.14 trillion recorded in January 2023, indicating substantial year-on-year growth of N40.48 trillion.
Additionally, compared to December 2023’s figure of N78.74 trillion, this represents a robust 19% increase, equivalent to N14.98 trillion.
Insights from the Central Bank of Nigeria detail these significant shifts in the nation’s monetary landscape through its comprehensive money and credit statistics.
The trajectory of Nigeria’s broad money supply, a crucial indicator of economic liquidity, has shown a clear and accelerating upward trend in recent years. M3 encompasses both net foreign assets and net domestic assets, providing a holistic view of the nation’s monetary dynamics.
Recent trends highlight a pronounced expansion in Nigeria’s money stock, intersecting with various economic challenges. Primary among these challenges are escalating inflation rates, mounting pressures on the naira’s exchange rate, and a downward trend in interest rates.
The increase in the money supply suggests a potential surge in inflation, posing a significant threat to the purchasing power of Nigerians. Moreover, an inflated money stock often correlates with a decline in interest rates, particularly in environments characterized by a lack of viable investment prospects.
Despite the significant surge in the money supply, the country’s economic growth has been tepid, with Nigeria’s projected economic growth rate for 2024 ranging from 2.9% to 3.1%, making it one of the slowest growth rates in West Africa.
This stark disparity reveals that the money supply is growing much faster than the economy. Inflation has emerged as a significant concern, with the headline inflation rate jumping to 29.9% in January 2024. While projections anticipate a drop to 21.5% this year, there is a possibility of it peaking at 44% if adverse economic conditions persist.
