Nigeria Records Second Money Supply Decline of 2025

• Nigeria’s broad money supply declined to N119.01 trillion in May 2025.
• The decline of N292.75 billion compromised overall economic liquidity.
• Net foreign assets saw an 8.1% decrease, signaling external concerns.
• Domestic assets rose, offsetting declines in foreign assets.
• Overall money supply still shows significant year-on-year growth.

Nigeria’s broad money supply declines for second time this year.

Nigeria’s money supply has taken a downturn for the second time in 2025, according to the latest release by the Central Bank of Nigeria (CBN). Specifically, the broad money supply decreased to N119.01 trillion in May, marking a month-on-month decline of N292.75 billion, which translates to a 0.25% fall from the N119.30 trillion recorded in April. The previous dip earlier this year was noted in February, where the money supply fell from N110.94 trillion in January to N110.32 trillion.

Year-on-year money supply growth reflects past expansions.

Despite this decline, the overall money supply remains at near-historic levels, hinting at lingering effects from prior liquidity surges and adjustments in monetary policy. From a year-over-year perspective, the growth pattern showcases an expansion of N19.77 trillion from May 2024, when the money supply was at N99.24 trillion, representing a remarkable increase of 19.9%. Diving into specifics, the figures reveal shifts in liquidity; net foreign assets decreased significantly from N49.87 trillion in April to N45.81 trillion in May—a worrying drop of N4.05 trillion or 8.1% that may indicate a weakened external asset position.

Contrasting trends in foreign and domestic assets noted.

On the other hand, net domestic assets saw a contrast, rising from N69.43 trillion to N73.19 trillion, a gain of N3.76 trillion or 5.4%. This spike in domestic liquidity somewhat cushioned the blow from the plummeting foreign assets and minimized the overall contraction in the money supply. However, M2, which is an intermediate measure of the money supply, experienced a slight dip as well, falling from N119.28 trillion in April to N118.99 trillion in May—signifying a reduction of N283 billion or 0.24%.

May contraction reveals impacts of monetary policy adjustments.

Similarly, M1, the narrow money category that includes currency in circulation and demand deposits, also faced a decline, dropping from N41.00 trillion to N40.38 trillion in May. This represents a reduction of N624.5 billion, or approximately 1.5%. However, when looking at it from a year-over-year standpoint, M1 remains significantly higher; it stood at N33.38 trillion in May 2024—a substantial increase of 20.9%, indicating that liquidity remains somewhat plentiful in the system, despite the CBN’s efforts at curbing it.

The recent figures for Nigeria’s money supply indicate a complex scenario of declines and expansions. With broad money supply reducing for the second time in 2025, the implications reflect a cautious approach as the CBN navigates between tightening policies and economic growth needs. How these trends evolve in the latter half of the year may hinge on the CBN’s responsive strategies to the interplay between fiscal pressures and exchange rate issues.