Nigeria’s Money Supply Grows 62.8% Year-on-Year Amid Tightening Measures

vNigeria’s money supply (M3) surged by 62.8% year-on-year in September 2024, reaching N108.95 trillion, despite the Central Bank’s (CBN) Monetary Policy Committee (MPC) tightening measures aimed at controlling inflation and excess liquidity.

According to the latest data from the CBN, M3 increased from N66.94 trillion in September 2023, with a month-over-month rise of 1.6% from N107.19 trillion in August 2024.

The robust growth in M3 underscores the resilience of the Nigerian economy, particularly under the leadership of CBN Governor Yemi Cardoso, who has been in office since September 22, 2023. M3 includes both net foreign assets and net domestic assets, providing a comprehensive view of the nation’s monetary dynamics.

Net domestic assets (NDA) rose by 54.6% year-on-year, climbing from N54.41 trillion in September 2023 to N84.14 trillion in September 2024, signaling strong lending activity as businesses seek credit despite rising interest rates. On a month-over-month basis, NDA also grew by 3%.

Meanwhile, net foreign assets (NFA) saw a significant year-on-year increase of 97.9%, from N12.54 trillion to N24.82 trillion. However, NFA declined by 2.7% month-over-month, possibly indicating CBN interventions in the foreign exchange market to stabilize the naira.

The MPC has acknowledged the complexities of managing monetary policy in the current environment. Governor Cardoso emphasized the need for vigilance to prevent inflationary pressures from escalating, stating, “The MPC noted the continued growth in money supply, recognizing the need to curtail excess liquidity in the system.”

MPC member Aku Pauline Odinkemelu raised concerns about the risks of excessive liquidity, linking it to inflationary pressures exacerbated by fiscal allocations. She warned that without proper management, Nigeria could face hyperinflation.

Fellow MPC member Lamido Abubakar Yuguda also highlighted the inflationary implications of rising money supply, noting that depreciation of the naira has contributed to the situation. He cautioned that ongoing liquidity increases could intensify inflationary risks, necessitating continuous vigilance.

The rise in money supply can stimulate economic growth by making credit more accessible for businesses and boosting consumer spending. However, unchecked growth could lead to further inflation, eroding purchasing power, particularly for lower-income households, if it outpaces production increases.

As Nigeria navigates these economic challenges, the CBN’s ongoing policies and interventions will be crucial in maintaining macroeconomic stability and controlling inflation.

Previous post Bitwise CIO Predicts Bitcoin Could Reach $200,000 Without Dollar Collapse
Next post BUA Foods Reports 94% Surge in Pre-Tax Profit for First Nine Months of 2024

Leave a Reply

Your email address will not be published. Required fields are marked *