Nigeria’s broad cash provide (M3) dropped to N117.78 trillion in September 2025, marking a 1.6% decline from N119.69 trillion in August, in response to contemporary knowledge from the Central Bank of Nigeria (CBN).
The contraction coincided with the Financial Coverage Committee’s determination to chop the Financial Coverage Charge (MPR) for the primary time in 5 years.
Regardless of the month-to-month fall, M3 was nonetheless up 7.6% year-on-year in comparison with N109.41 trillion in September 2024, exhibiting the stability between longer-term liquidity enlargement and short-term tightening pressures.
M3, which captures M2 (foreign money, demand deposits, and quasi-money) alongside different broad elements, is formed by internet home property and internet international property. These two pillars supply clues to what drove the September decline.
Home property shrink regardless of first price minimize
The CBN’s price minimize was introduced by Governor Olayemi Cardoso after the 302nd MPC assembly held on September 22–23. The committee decreased the MPR by 50 foundation factors to 27.00%, adjusted the Standing Amenities hall to +250/-250 foundation factors, raised the Money Reserve Requirement (CRR) for industrial banks to 45%, and launched a 75% CRR on non-TSA public sector deposits. The Liquidity Ratio was retained at 30%.
Cardoso emphasised that the easing was designed to stability progress issues with inflation dangers, marking the primary minimize since September 2020. It adopted six consecutive hikes in 2024 and three pauses earlier in 2025.
But, even with the benchmark minimize, the September knowledge reveals home credit score circumstances tightened. Web home property dropped by 2.5% to N76.12 trillion from N78.10 trillion in August, successfully dragging down M3. This means that the upper CRR necessities and stricter liquidity guidelines outweighed the marginal reduction from the rate of interest minimize, constraining banks’ skill to develop credit score.
In the meantime, internet international property edged barely larger to N41.66 trillion from N41.59 trillion in August, a 0.2% rise. This offered some cushion however was far too small to offset the contraction in home property. In comparison with a yr earlier, when international property stood at N19.50 trillion, September’s stability confirmed a pointy enchancment, nevertheless it nonetheless performed a restricted function in month-to-month liquidity dynamics.
This sample reveals the dominant function of home credit score enlargement in Nigeria’s cash provide. Even in a month when the CBN minimize its price, the load of liquidity-absorbing measures just like the 75% CRR on public deposits tipped the scales in the direction of contraction.
Slim cash and M2 additionally replicate tighter liquidity
The weak spot was not confined to M3. Each M2 and M1, the narrower measures of cash provide, additionally fell in September, exhibiting the affect of coverage tightening throughout liquidity channels.
M2 declined by 1.6% to N117.77 trillion in September from N119.68 trillion in August. On a year-on-year foundation, nevertheless, it nonetheless grew by 7.7% from N109.40 trillion in September 2024. M2 tracks money, demand deposits, and financial savings or time period deposits, offering a window into households’ and corporations’ monetary balances. Its contraction suggests deposit progress slowed, presumably reflecting weaker banking sector credit score creation and tighter liquidity from the CRR hike.
Slim cash (M1), which covers probably the most liquid types of cash resembling money and demand deposits, dipped to N39.11 trillion in September from N39.39 trillion in August, a 0.7% decline. However in comparison with N35.86 trillion in September 2024, M1 grew by 9.1%, exhibiting stronger money balances than final yr regardless of the month-to-month pullback.
M1 is usually watched as a barometer of fast spending energy. Its fall in September suggests shoppers and companies had much less prepared money to spend, in keeping with the consequences of tighter liquidity guidelines even because the rate of interest minimize signalled some reduction.
What you must know
The September figures spotlight the stress on the coronary heart of Nigeria’s financial coverage. The CBN’s first price minimize in half a decade was meant to ease borrowing prices and help progress. Nevertheless, the simultaneous improve in CRR necessities and strict liquidity measures constrained the banking sector, knocking down M3 and different cash aggregates.
Whereas price cuts could proceed if inflation eases, liquidity will stay underneath strain except international inflows strengthen or the CBN relaxes its reserve necessities. For now, the drop in cash provide means that, regardless of the symbolic price minimize, the CBN’s tightening hand continues to be firmly on the tiller of Nigeria’s monetary system.
The CBN’s MPC is anticipated to fulfill on 24-25 November 2025, and with headline inflation having eased to 18.02% in September, the financial coverage committee faces strain to contemplate additional price cuts at the same time as liquidity stays constrained.
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