The Central Bank of Nigeria (CBN) has reported a remarkable 51% year-on-year rise in Nigeria’s Broad Money Supply (M2), which reached ₦108.95 trillion in November 2024, compared to ₦72.03 trillion recorded in November 2023.
Also, This surge, outlined in the CBN’s report titled Money and Credit Statistics, released on December 30, 2024, is attributed primarily to increased domestic borrowing by the Federal Government and robust credit growth in the private sector.
Components of Growth
1. Credit to the Government
Credit to the Federal Government surged by an impressive 54% year-on-year, climbing to ₦39.6 trillion in November 2024, up from ₦25.7 trillion in November 2023. This borrowing trend reflects efforts to finance budget deficits amidst ongoing fiscal challenges.
2. Credit to the Private Sector
Private sector loans and advances also saw a significant boost, rising by 27% year-on-year to ₦75.96 trillion, compared to ₦59.7 trillion in November 2023.
Monthly Trends and Policy Implications
After a temporary dip of 1.5% in October 2024, Broad Money Supply resumed its upward trajectory in November, growing by 1.2% month-on-month to ₦108.96 trillion. The sustained growth since April 2024 highlights increased liquidity in the Nigerian economy.
While the rise in money supply reflects enhanced access to financial instruments, it raises concerns about inflationary pressures. Policymakers must navigate the delicate balance between boosting liquidity to spur economic growth and managing inflation risks through effective fiscal and monetary policies.
The latest developments underscore the importance of maintaining a strategic approach to credit allocation to ensure sustainable economic growth while safeguarding the economy against potential macroeconomic instability.
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