Despite CBN’s tight policy, Nigeria’s money supply hit all-time high of N51.8 trillion in November 2022

Godwin Emefiele

Nigeria’s money supply reached an all-time high of N51.8 trillion in November 2022, a N7.97 trillion increase year on year. According to data obtained from the Central Bank of Nigeria (CBN).

The broad money supply (M3), which is used to measure liquidity in the economy, has been rapidly increasing in recent years. It is made up of both net foreign assets and net domestic assets.

The increase in the country’s broad money supply comes despite the apex bank’s efforts to mop up excess liquidity by adopting a hawkish monetary policy stance, which includes raising the monetary policy rate by 500 basis points between May and November 2022.

Specifically, the CBN adjusted the MPR from 11.5% which it adopted in September 2020 to 16.5% in its last committee meeting, in a bid to tackle the rising rate of the inflation rate and persistent depreciation of the exchange rate.


A further look at the data from the apex bank revealed that the increase in Nigeria’s broad money supply was driven by the surge in the net domestic assets (NDA), which gained N11.18 trillion between January and November 2022, while net foreign assets declined by N3.21 trillion in the same period.

Specifically, the CBN’s monetary policy committee attributed the increase in the country’s money supply to increased claims. An excerpt from the November 2022 MPC communique said:


  • “This growth was driven by increased claims on ‘Other Sectors’ (other financial corporations, public non-financial corporations, and private sector).” 

Fuelling higher inflation: Nigeria’s inflation numbers have responded in the same direction as the money supply movement, touching a 17-year high in November 2022 on the back of ten consecutive months of inflation increases.

The rising cost of goods and services has been attributed to the global energy crisis and the general increase in the prices of food items in the international market, which has also been reflected in Nigeria’s imported inflation numbers.

  • However, analysts and experts have raised concerns towards the number of interventions by the apex bank into the economy, citing that the excess liquidity in the economy is fuelling inflationary pressure.
  • According to the CBN, 84% of the total currency in circulation as of November 2022 is out of the banks’ vaults, which is believed to be contributing to Nigeria’s rising inflation rate.

Yet tepid GDP growth: Nigeria’s economy has maintained a positive growth trajectory since the covid-induced recession in 2020. However, the growth has been at a rather slower pace compared with the increase in supply.

A larger money supply is believed to lower market interest rates, making it less expensive for businesses to borrow and vice versa, helping to spur real growth in the economy. However, recent GDP numbers show slow growth in the Nigerian economy.

  • According to the NBS, Nigeria’s GDP grew by 2.25% year-on-year in real terms in the third quarter of 2022, lower than the 3.54% and 4.03% printed in the previous quarter and the corresponding period of last year respectively.
  • Scientific studies have also established a significant relationship between money supply and economic growth, which is not currently playing out in the case of the African giant, following other headwinds keeping productivity below desired levels.
  • Some of these factors include depreciating exchange rate, ease of doing business, infrastructural deficit, rising prices, and massive brain drains amongst others.

CBN’s recent actions: The Central Bank last month announced the designing of the naira for N200, N500, and N1000 denominations, which began circulation on 15th December 2022 and is expected to be in use simultaneously as the old note till 31st January 2023.

  • The decision according to the apex bank was made in light of growing cases of naira counterfeiting and currency hoarding. “In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country,”
  • “In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes. Although global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.”
  • In September 2022, the CBN during its MPC briefing announced the increase of the Cash Reserve Requirement (CRR) to a minimum of 32.5% in a bid to mop-up excess liquidity in the economy.
  • Also, in November, the regulatory body ordered commercial banks to reduce the maximum weekly limit for cash withdrawal across all individuals and corporate organizations to N100,000 and N500,000 respectively.
  • This was however reviewed upward to N500,000 for individuals and N5 million for corporate organizations.
  • In the same vein, the CBN noted that the bank will be reducing the amount of higher denominations in circulation, by ordering banks to only load N200 and less into their ATMs from January.
  • The Bank also encouraged the use of alternative channels such as internet banking, mobile banking apps, USSD, cards/POS, and the eNaira to carry out financial transactions going forward.  READ MORE.



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I'm the Chief- Editor at CreebHills. We strive to constantly provide news in various domains in connection to the Nigerian region and the rest of the world. I work also as a PR and Brand Specialist and aim to grow Creebhiils as a brand to reach mass audiences. You can reach out to me at [email protected]