Significant Year-on-Year Growth in M2
Nigeria’s Broad Money Supply (M2) has seen a dramatic 51% increase year-on-year, reaching N108.96 trillion in November 2024, up from N72.03 trillion in November 2023. This surge, as reported by the Central Bank of Nigeria’s Money and Credit Statistics, was largely fueled by domestic borrowings by the Federal Government from the private sector.
Components of Money Supply
M2 includes cash, demand deposits, savings deposits, money market deposits, and time deposits. The report indicates a consistent growth in M2 over the past six months, starting from April 2024, with a brief decline in October before recovering in November.
Detailed Breakdown of Growth
- Quasi Money: This category, which encompasses savings and time deposits among other assets, grew by 1.96% year-on-year to N72.7 trillion from N71.3 trillion.
- Demand Deposits: These saw a substantial rise of 34.4% year-on-year, moving from N23.2 trillion to N31.6 trillion.
- Currency Outside Banks: Increased by 50.9%, from N3.08 trillion to N4.65 trillion.
- Narrow Money (M1): Recorded a significant 38% growth, jumping from N26.3 trillion to N36.3 trillion.
Credit Dynamics
- Government Credit: There was a 54% increase in credit extended to the government, totaling N39.6 trillion from N25.7 trillion.
- Private Sector Credit: Credit to the private sector also rose by 27%, from N59.7 trillion to N75.96 trillion.
This expansion in money supply and credit has led to a 91% year-on-year increase in net domestic credit, now standing at N115.6 trillion compared to N60.5 trillion the previous year. This financial landscape reflects both the government’s borrowing strategy and the broader economic activity within Nigeria.
