As the prices of goods and services continue to be at a high. Nigeria’s money supply has increased to N46.5 trillion in the 12 months ending April this year.
The huge surge in money supply reflects increasing demand for cash by members of the public caused by the continued rise in prices of goods and services, evidenced by the three consecutive months rise in the inflation rate at 16.82 per cent in April this year.
However, the surge in money supply is driven by increased borrowing by the Federal government and lending to the private sector propelled by the various intervention funds of the Central Bank of Nigeria, CBN.
Analysts were, however, divided in their projections for money supply growth for the remaining months of the year especially in the face of election year spending and recent hike in the Monetary Policy Rate, MPR, by the CBN.
The data on Credit and Money supply by the Central Bank shows that Broad Money supply (M2) grew 21 per cent to N46.54 trillion in the 12 months ending April 2022, representing 1.0 percentage points higher than the 20 per cent growth recorded in the 12 months ending April 2021.
The growth recorded in 12 months ending April 2022 is also 5.7 percentage points higher than the 15.3 per cent average growth in four years, namely 12 months ending April 2018, April 2019, April 2020 and April 2021.
Further analysis also showed that major components of M2, namely Narrow Money (M1) and Quasi Money, recorded sharp increases in the 12 months ending April 22022.
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