Nigeria's money supply has taken a surprising turn, dropping by 1.58% to N117.8 trillion in September 2025. This is a significant development that has raised eyebrows and sparked discussions among economists and financial experts. The primary driver of this decline is a concerning 5% drop in banks' credit to the economy, which has sent ripples through the financial landscape.
But here's where it gets controversial... The Central Bank of Nigeria (CBN) has released its Money and Credit Statistics Data for September 2025, revealing that all components of the money supply, except Currency Outside Banks (COB), experienced a decline during this period.
Quasi Money, a key indicator, decreased by a substantial 1.99% month-on-month (MoM), dropping to N78.7 trillion in September from N80.3 trillion in August. Narrow Money (M¹) also followed suit, declining by 0.76% MoM to N39.1 trillion in September. Even Demand Deposits, a critical measure of liquidity, fell by 0.86% MoM to N34.6 trillion in September.
However, there's a silver lining in the form of Currency Outside Banks (COB), which rose slightly by 0.45% MoM to N4.47 trillion in September. This small increase, though, is not enough to offset the overall decline in money supply.
The decline in money supply and credit to the economy can be attributed to the CBN's aggressive monetary tightening stance. The apex bank has been taking bold steps to rein in inflation, which has stubbornly remained in double digits despite multiple interest rate hikes. Since mid-2023, the Monetary Policy Rate (MPR) has been raised by over 800 basis points, tightening liquidity across the banking sector.
This move by the CBN has had a profound impact on the economy, and its effectiveness in curbing inflation is a topic of debate.
And this is the part most people miss... The decline in credit to the private sector, which fell to N72.5 trillion in September from N75.9 trillion in August, has a significant impact on businesses and individuals. This reduction in credit availability can hinder economic growth and affect the ability of businesses to expand and create jobs.
The decline in money supply and credit to the economy is a complex issue with far-reaching implications. It raises questions about the balance between controlling inflation and ensuring economic growth.
What are your thoughts on the CBN's monetary policy and its impact on Nigeria's economy? Do you think the benefits of controlling inflation outweigh the potential drawbacks for businesses and individuals? Feel free to share your insights and opinions in the comments below!
