Nigeria’s money supply rises to N147tn in September

Currency in circulation within Nigeria expanded by 81 percent to reach 5.44 trillion naira in August 2026, according to data released by the Central Bank of Nigeria. This figure represents a substantial jump from the 3.01 trillion naira recorded in August 2023. The surge in physical cash holdings persists despite the rapid proliferation of electronic payment systems, mobile banking, and fintech services over the last three years. The most dramatic phase of this growth occurred between August 2023 and August 2024. During that twelve-month period, currency in circulation climbed from 3.010 trillion naira to 4.55 trillion naira. This single-year increase amounted to 1.54 trillion naira, or 51.1 percent. Subsequent annual growth rates have decelerated markedly. By August 2025, the total had risen to 5.057 trillion naira, marking a year-on-year gain of 508 billion naira, or 11.2 percent. The pace slowed further by August 2026, with the total hitting 5.436 trillion naira. This represented an increase of 379 billion naira, equivalent to 7.5 percent compared to the prior year. These trends in circulating cash coincided with a parallel explosion in bank reserves. Reserves grew from 18.528 trillion naira in August 2023 to 25.456 trillion naira in August 2024, a rise of 6.928 trillion naira or 37.4 percent. The upward trajectory continued, with reserves reaching 31.583 trillion naira in August 2025 and 36.067 trillion naira by August 2026. Over the three-year span, bank reserves accumulated an additional 17.539 trillion naira, totaling a 94.7 percent increase. The central bank classifies both currency in circulation and bank reserves as components of reserve money, also known as base money. David Adonri, managing director of High Cap Securities Limited, noted that holding more money as physical cash removes a portion of liquidity from the immediate deposit base of commercial banks. Consequently, these funds are less available for banks to intermediate through loans and other financial assets. However, he cautioned that rising currency stocks should not be automatically interpreted as evidence of excessive liquidity or inflationary pressure. Demand for cash often increases due to higher nominal prices, larger transaction values, and broader economic activity. Adonri emphasized that the persistence of physical currency suggests Nigeria’s digital payment revolution has not yet eliminated the country’s cash economy. Separate data indicated that Nigeria’s broad money supply, measured as M3, rose by 7.51 trillion naira in September 2026 to reach 146.6 trillion naira. This marked a 5.4 percent increase from the 139.09 trillion naira recorded in August. Since January, money supply has grown by 22.65 trillion naira, or 18.3 percent, from a baseline of 123.95 trillion naira. Narrow money, comprising currency and highly liquid deposits, increased from 43.11 trillion naira in August to 44.05 trillion naira in September. Currency held outside banks rose from 4.87 trillion naira to 4.92 trillion naira during the same interval. The expansion in money supply followed the central bank’s decision at its 307th Monetary Policy Committee meeting in September to cut the benchmark interest rate by 350 basis points to 23 percent. This reduction, down from 26.5 percent, was the largest cut to the benchmark rate since December 2006. The committee adjusted the interest rate corridor to plus 50 basis points and minus 300 basis points. It retained the Cash Reserve Requirement for commercial banks at 45 percent and for merchant banks at 16 percent. The 75 percent reserve requirement on non-Treasury Single Account public-sector deposits was also maintained. This move followed a July meeting where the rate had been held steady at 26.5 percent. Prior to that, the committee had cut the rate by 50 basis points to 27 percent in September 2025 and kept it there in November. Analysts observe that the impact of the current liquidity expansion on inflation, lending, and economic growth will depend on how much of the additional funds flows into credit and spending across the economy.