Nigeria’s broad money supply rose to ₦133.25 trillion in June 2026, increasing by ₦4.04 trillion in one month despite the Central Bank of Nigeria maintaining its benchmark interest rate at 26.5%.
The increase means more money is circulating through Nigeria’s financial system at a time when the CBN is using high interest rates to control inflation and reduce excess liquidity.
For businesses, the development presents a complicated picture. More liquidity can support lending, investment and commercial activity. But when money supply expands faster than the production of goods and services, it can also increase inflationary pressure, weaken the naira and raise operating costs.
The CBN disclosed the figures in its latest money and credit statistics.
Money Supply Rose by ₦4.04tn in One Month
Broad money supply, also known as M3, increased from ₦129.21 trillion in May to ₦133.25 trillion in June.
This represents a monthly increase of 3.11%.
Compared with June 2025, when M3 stood at ₦117.25 trillion, Nigeria’s money supply increased by about ₦16 trillion, or 13.59%, within one year.
Broad money measures the amount of money available across the economy. It includes:
- Currency held outside banks
- Demand deposits
- Savings and time deposits
- Foreign currency deposits
- Other forms of liquid financial assets
An increase in M3 means households, businesses, banks and government institutions collectively hold more money and near-cash assets within the financial system.
However, a larger money supply does not automatically mean businesses have easier access to affordable credit.
Quasi-Money Drove Most of the Increase
The CBN figures showed that quasi-money rose from ₦84.58 trillion in May to ₦88.54 trillion in June.
Quasi-money includes savings deposits, time deposits and foreign currency deposits that cannot immediately function like cash but can be converted relatively easily.
Demand deposits also increased from ₦39.43 trillion to ₦39.78 trillion.
However, currency held outside banks declined from ₦5.19 trillion to ₦4.92 trillion.
The decline in cash outside the banking system suggests that more funds may have moved into formal financial institutions during the month.
For banks, higher deposits can increase the pool of funds available for lending and investment. But the cost of borrowing remains high because the CBN has kept the Monetary Policy Rate at 26.5%.
Commercial banks usually price loans above the benchmark rate after adding operational costs, risk premiums and profit margins. This means many businesses may still face lending rates well above 30%.
Domestic Assets Powered the Expansion
The main driver of the increase came from net domestic assets.
Net domestic assets rose by 4.37%, increasing from ₦102.26 trillion in May to ₦106.73 trillion in June.
Net foreign assets, however, declined by 1.56%, falling from ₦26.95 trillion to ₦26.53 trillion.
This means the expansion came mainly from domestic financial activity rather than stronger foreign asset accumulation.
Net domestic assets include credit extended to the government and private sector, as well as other claims within the domestic economy.
The rise may reflect increased lending, government financing needs, banking-sector asset growth or a combination of these factors. The available figures do not show which component contributed the most.
This distinction matters because money created through productive private-sector credit can support business expansion, employment and output. But liquidity driven mainly by government borrowing may place more pressure on inflation without producing enough goods and services.
Why High Interest Rates Have Not Stopped Money Supply Growth
The CBN kept the Monetary Policy Rate at 26.5% after its Monetary Policy Committee meeting in May 2026.
High interest rates usually aim to reduce borrowing and spending. They encourage people to save more, make loans more expensive and help the central bank withdraw excess liquidity from the economy.
However, the MPR does not control every source of money creation.
Money supply can still grow when:
- Banks increase credit to government or businesses
- Government spending injects more funds into the economy
- Deposits rise across the banking system
- Foreign currency deposits increase in naira value
- Financial institutions create more assets through lending
Therefore, the increase in money supply does not necessarily mean the CBN’s interest-rate policy has completely failed. It shows that other sources of liquidity remain strong enough to offset part of the tightening effect.
What This Means for Nigerian Businesses
The money supply increase could affect businesses in four major ways.
1. Borrowing May Remain Expensive
Although banks may have more deposits, the high MPR means the cost of credit will remain elevated.
Large companies with strong balance sheets may still obtain financing, but small and medium-sized businesses could struggle to borrow at sustainable rates.
A company earning a profit margin of 15% cannot comfortably service a loan priced above 30% without increasing prices, reducing investment or cutting costs.
2. Inflationary Pressure Could Persist
When more money enters the economy without a similar increase in production, consumers and businesses compete for the same quantity of goods and services.
This can push prices higher.
Manufacturers may face higher input costs, while retailers may pay more for inventory. Logistics companies could also adjust charges if fuel, vehicle maintenance and financing costs rise.
3. The Naira Could Face Additional Pressure
A larger money supply can increase demand for foreign exchange, particularly when businesses need dollars to import machinery, raw materials and finished products.
When naira liquidity grows faster than dollar supply, the exchange rate may come under pressure.
A weaker naira would increase import costs and make production more expensive for companies that depend on foreign inputs.
4. Banks May Prefer Safer Investments
High interest rates can make government securities more attractive to financial institutions.
Instead of lending to businesses that carry repayment risks, banks may invest more funds in government instruments that offer high returns.
This can reduce the amount of credit available to the productive economy, even when total money supply is rising.
Expert View: More Liquidity Does Not Guarantee More Business Growth
The central issue is not only how much money exists in the economy, but where that money is going.
An increase in deposits and domestic assets can support economic growth when banks direct more credit towards manufacturing, agriculture, technology, infrastructure and other productive sectors.
But the benefit to businesses will remain limited if most of the liquidity flows into government securities, short-term financial investments or consumption.
Nigeria therefore faces a policy contradiction: liquidity is expanding, but the cost of borrowing remains too high for many businesses.
The CBN must control inflation without shutting productive companies out of the credit market. At the same time, the government must reduce the fiscal pressures that force it to borrow heavily from the domestic financial system.
A lasting solution requires stronger production, lower government financing needs and more affordable credit for businesses capable of creating jobs and expanding output.
Why This Matters
Nigeria’s rising money supply shows that high interest rates alone may not be enough to control liquidity.
The CBN must also examine the growth of domestic assets, bank credit, government borrowing and deposits across the financial system.
For businesses, the immediate concern is that more money in the economy may not translate into cheaper loans. Instead, it could increase inflation, foreign exchange demand and operating costs.
The next policy challenge is to ensure that Nigeria’s growing liquidity supports production rather than simply pushing up prices.
Frequently Asked Questions
1. What is Nigeria’s money supply?
Nigeria’s money supply is the total amount of cash, deposits and other liquid financial assets available within the economy. Broad money, or M3, includes currency outside banks, demand deposits, savings, time deposits and foreign currency deposits.
2. Why did money supply rise despite the 26.5% interest rate?
Money supply can rise even when interest rates remain high because banks, government spending, deposits and domestic credit also influence liquidity. The June increase came mainly from the expansion of net domestic assets and quasi-money.
3. Will the increase make business loans cheaper?
Not necessarily. Banks may have more funds available, but the 26.5% benchmark rate keeps borrowing costs high. Commercial lending rates will likely remain much higher after banks add risk, administrative costs and profit margins.
