Analyst warns of inflationary risks, urges productive deployment
By Peter Egwuatu
Nigeria’s broad money supply, M3, more than doubled in three years to August 2026, rising by 110.6 per cent to N139.4 trillion, from N66.2 trillion in the corresponding period of 2023, amid sustained expansion in liquidity in the economy.
M3 is the broadest measure of money supply and provides an indication of the total liquidity available within the economy.
On a Year-on-Year, YoY, basis, broad money supply rose by 16.4 per cent, or N19.7 trillion, to N139.4 trillion in August 2026 from N119.7 trillion in August 2025.
The latest CBN figure also represents a marginal 0.4 per cent increase from N138.8 trillion recorded in July 2026.
The data showed that the strongest annual expansion during the three-year period occurred between August 2023 and August 2024, when M3 jumped by 61.9 per cent, or N41trillion, to N107.2 trillion from N66.2 trillion.
The pace subsequently moderated, with M3 increasing by 11.7 per cent to N119.7 trillion in August 2025, before accelerating slightly in August 2026.
Sustained expansion in M3 can support credit, investment and economic activity, but analysts note that rapid liquidity growth can add to inflationary and exchange-rate pressures when the increase in money supply significantly outpaces growth in the production of goods and services.
Meanwhile, narrow money, M1, which comprises the most liquid forms of money available for transactions, rose to N43.26trillion in August 2026 from N39.4 trillion in August 2025. It stood at N34.95 trillion and N24.44trillion in August 2024 and August 2023 respectively.
The figures indicate that M1 expanded by about 77 per cent over the three-year period, reflecting a substantial increase in immediately spendable liquidity.
Analyst raise inflation concerns
An investment analyst, who preferred to remain anonymous, said: “The important issue is not merely that money supply has increased, but where the liquidity is going. If the additional money is channelled through the financial system into productive businesses, particularly manufacturing, agriculture and infrastructure, it could support economic growth.
“But if liquidity expansion runs significantly ahead of real output growth, the excess money could chase limited goods and services, creating fresh pressure on prices. That is why monetary expansion has to be considered alongside credit growth, inflation and actual economic production.”
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