Nigeria’s Money Supply Surges to N64.9 Trillion in July 2023

Nigeria’s money supply, measured by M2, witnessed a substantial rise to N64.9 trillion in July 2023, up from N64.3 trillion in June. This surge represents a notable increase from the N55.5 trillion recorded in May, amounting to a substantial N9.4 trillion growth. These figures, recently released by the Central Bank of Nigeria as part of its money and credit statistics, highlight the total amount of money circulating in the economy at a given time.

Relevance in Economic Evaluation

The money supply, particularly M2, plays a pivotal role in assessing interest rates and potential inflation within a specified timeframe. The recent surge in Nigeria’s money supply aligns with several challenges the country is facing, including rising inflation, exchange rate pressure, and diminishing interest rates.


Impact on Inflation and Purchasing Power

As the money supply expands, the risk of inflation rises, which in turn could lead to a decrease in purchasing power for individuals and businesses. The larger money supply may also contribute to declining interest rates, especially when the supply of investment assets is limited. This scenario could make Nigerian assets less appealing to foreign investors, a concern given Nigeria’s reliance on dollar imports.

Key Insights from the Data

M2 Components and Growth


A closer examination of the data reveals growth in specific components of the M2 money supply. Demand deposits, quasi-money, and currency outside banks all experienced increases. Notably, quasi-money – financial instruments easily convertible to cash – surged by N905.8 billion for the month, possibly due to the revaluation of certain dollar-denominated investments. Meanwhile, demand deposits, accessible without prior notice, decreased by N283.7 billion, and currency outside banks saw a modest increment of N54 billion.

M3 Dynamics and Expansion

In addition to M2, another money supply gauge called M3, encompassing net domestic assets and net foreign assets, also grew. Both components exhibited growth from June to July. Net foreign assets experienced a substantial rise, moving from N4.9 trillion in May 2023 to N9.2 trillion, albeit down from N11 trillion in June. This dynamic between M3 and M2 indicates a blend of factors contributing to the surge, including revalued dollar assets, incorporation of new assets, and credit formation in July.

Government Credit and Net Domestic Credit

Credit to the government expanded from N31.2 trillion to N32.3 trillion, while net domestic credit increased from N84 trillion to N86.4 trillion. The M3 figure for July 2023 reached N65.4 trillion, slightly higher than the M2 value of N64.9 trillion.

Conclusion and Ongoing Observations

As Nigeria navigates its economic landscape, experts will closely observe the impact of the expanding money supply on inflation, interest rates, and investment attractiveness. The interplay between various factors driving this surge will shape the country’s economic trajectory in the coming months.