2 days Ago By Guardian Nigeria
Despite the efforts of the Central Bank of Nigeria (CBN) to control the money supply through its tightening measures, the latest report from the apex bank shows that Nigeria’s broad money supply (M2) soared by 51.4 per cent year-on-year (YoY) to reach N108.96 trillion in November 2024.
The surge according to the CBN was fueled by increasing domestic borrowings by the Federal Government. Broad money supply is a measure of the total amount of money in circulation in an economy, including both cash and non-cash components. According to the CBN’s money and credit statistics update, the increase represents a sharp rise from the N72.
03 trillion recorded in the same period of 2023. It said while M2 witnessed sustained growth over six consecutive months from April, the trend briefly reversed in October 2024, declining by 1.5 per cent to N107.
7 trillion from N109.4 trillion in September. However, the supply rebounded by 1.
2 per cent in November, reaching N108.96 trillion. The report said the YoY surge in M2 was driven by positive movements in its core components, highlighting a broader liquidity expansion across various financial instruments, made up of quasi-money, which includes savings deposits, time deposits and other near-money assets.
The component grew marginally by 1.96 per cent YoY, reaching N72.7 trillion in November 2024.
Demand deposits increased significantly by 34.4 per cent YoY, climbing to N31.6 trillion from N23.
2 trillion during the same period. Currency outside banks rose sharply by 50.9 per cent YoY bringing this figure to N4.
65 trillion in November 2024 from N3.08 trillion in November 2023. The CBN data also revealed a notable increase in credit allocation across the public and private sectors.
According to the report, credit to the government rose by a staggering 54 per cent YoY, reaching N39.6 trillion in November 2024 compared to N25.7 trillion in November 2023, while credit to the private sector, in the form of loans and advances, increased by 27 per cent YoY, amounting to N75.
96 trillion. The combined growth in domestic credit resulted in a massive 91 per cent YoY rise in net domestic credit, which soared to N115.6 trillion in November 2024 from N60.
5 trillion in the corresponding period of 2023, translating to a 92 per cent increase. Experts believe that while the rising liquidity supports economic activities, there is a need for balanced fiscal and monetary policies to sustain economic growth without worsening inflation..
