Nigeria’s broad money supply (M₂) declined month-on-month to ₦118 trillion in September 2025, reflecting the impact of the Central Bank of Nigeria’s (CBN) sustained monetary tightening aimed at curbing inflation.
According to the CBN’s Money and Credit Statistics for September 2025, released on Tuesday, most components of the money supply contracted during the month — except Currency Outside Banks (CoB).
The total money supply dropped from ₦119.7 trillion in August, driven primarily by a 5% decline in banks’ credit to the economy.
The CBN attributed the contraction to its aggressive tightening stance, which has seen the Monetary Policy Rate (MPR) rise by more than 800 basis points since mid-2023, effectively reducing liquidity across the financial system.
Narrow Money (M₁) fell by 0.76% to ₦39.1 trillion in September from ₦39.4 trillion in August, while Quasi Money decreased by 1.99% to ₦78.7 trillion from ₦80.3 trillion. Similarly, Demand Deposits dropped by 0.86% to ₦34.6 trillion from ₦34.9 trillion.
In contrast, Currency Outside Banks edged up slightly by 0.45%, rising to ₦4.47 trillion in September from ₦4.45 trillion in August.
The CBN data also revealed that total credit to the economy declined by 2.1% month-on-month, falling to ₦96.7 trillion in September from ₦98.8 trillion in August.
This was largely due to a 4.4% drop in banks’ credit to the private sector, which fell to ₦72.5 trillion from ₦75.9 trillion, overshadowing a 5.67% rise in credit to the government, which increased to ₦24.2 trillion from ₦22.9 trillion in the same period.
Analysts note that the contraction in money supply underscores the CBN’s commitment to combating persistent double-digit inflation, though it also highlights the tightening liquidity conditions facing businesses and households.
