Money supply and cash in circulation rose in December 2025 while government borrowing crowded out private credit.
• Broad money supply rose to about N124.4 trillion in December 2025 • Currency in circulation reached roughly N5.7 trillion at year‑end • Government borrowing increased by about N9.19 trillion in 2025, crowding out private credit
Central bank and cash‑management analysts: Rising currency in circulation and higher money supply reflect both seasonal spending and concerns about currency management and public confidence. Private sector and industry groups: Manufacturers and the organised private sector warn that sharply higher government borrowing from domestic markets has crowded out bank lending to businesses, raising costs and constraining investment. Macro analysts and economists: Note a nuanced picture — December showed a modest rebound in private sector credit, but the rise in net domestic credit driven by government financing and higher currency in circulation creates inflation and growth trade‑offs unless policy balances fiscal financing and credit to the productive sector.
Recent Central Bank of Nigeria (CBN) data and media reports show Nigeria’s broad money supply (M2/M3) rose to about N124.4 trillion in December 2025, accompanied by a jump in currency in circulation to around N5.7 trillion as the year closed — a new high versus December 2024 — even as inflation eased to about 15.15% in December from 17.33% in November. [1][2][4] At the same time, measured private sector credit recorded a modest month‑on‑month increase to roughly N75.8 trillion in December 2025 (up from about N74.6 trillion in November), but remained below December 2024 levels. Net domestic credit expanded sharply (to about N110.05 trillion), driven largely by a marked rise in government borrowing — credit to the Federal Government rose by roughly N9.19 trillion over 2025 to N34.22 trillion in December — a shift that analysts say has squeezed lending to businesses over the year. [2][3][4] The combined data point to a mixed picture: liquidity and cash usage increased at year‑end while lending to the private sector showed only a modest recovery after an extended decline, because fiscal financing needs absorbed much of the financial system’s resources. Observers flag potential policy tensions — higher currency and money supply can stoke inflationary pressure, while continued government crowding‑out may constrain private investment unless targeted measures are introduced to restore bank lending to productive sectors. [1][2][3]