Nigeria’s money supply contracted to a four-month low in January 2026, as the Central Bank of Nigeria (CBN) continued its efforts to curb inflation and stabilize the economy, according to data released by the apex bank.
Broad money supply (M3) fell to N123.36 trillion in January, down from N124.4 trillion in December 2025, representing a 0.84 percent month-on-month decline. This marks the lowest level since September 2025, when money supply decreased to N117.78 trillion from N119.69 trillion the previous month.
Despite the monthly decrease, the money supply remained 11.04 percent higher than in January 2025, when it stood at approximately N111.11 trillion, indicating sustained monetary growth over the past year.
The CBN has been actively withdrawing liquidity from the banking system. In January 2026, the central bank absorbed approximately N13.41 trillion, a significant increase compared to the N2.77 trillion withdrawn during the same period in 2025, according to analysis from the Financial Market Dealers Association (FMDA) Research.
Currency in circulation outside of banks experienced a slight decline, slipping by 0.003 percent month-on-month to N5.731 trillion in January, compared to N5.733 trillion in December. However, year-on-year, currency in circulation rose by 9.47 percent from N5.235 trillion in January 2025.
Money held outside the banking sector also decreased, falling by 3.66 percent to N5.210 trillion in January from N5.408 trillion in December. Despite this decline, the figure remained 9.99 percent higher than the N4.737 trillion recorded in January of the previous year.
The January contraction followed a broader trend of slowing money supply growth observed at the end of 2025. In November 2025, Nigeria’s money supply growth had fallen to a five-year low of 12.83 percent as the CBN intensified its anti-inflation measures.
Over the past year, the CBN has increasingly utilized Open Market Operations (OMO) and the Standing Deposit Facility to remove excess funds from the banking system. OMO sales surged by 1,607.03 percent year-on-year to N8.53 trillion in January 2026, compared to approximately N500 billion in January 2025.
Ayodeji Ebo, Managing Director and Chief Business Officer at Optimus by Afrinvest, stated that the substantial increase in OMO sales demonstrates the central bank’s commitment to managing excess liquidity, controlling inflation, and supporting exchange rate stability. He added that increased OMO issuances can attract foreign portfolio inflows and influence domestic interest rates.
“It signals a tightening monetary stance aimed at stabilising the economy, whereas its effectiveness will depend on broader fiscal policies and external conditions,” Ebo said.
Credit to the government decreased slightly, falling by 0.09 percent month-on-month to N34.19 trillion in January, from N34.221 trillion in December. However, government credit expanded significantly by 36.59 percent year-on-year, from N25.03 trillion in January 2025.
Private sector credit also experienced a modest decline, falling by 0.78 percent month-on-month to N75.241 trillion in January, from N75.834 trillion in December. Year-on-year, private sector credit grew by 2.76 percent, although from a higher base of N77.377 trillion recorded in January of last year.
Analysts at FMDA noted that the Monetary Policy Committee’s decision on February 24, 2026, to reduce the Monetary Policy Rate from 27 percent to 26.5 percent could influence credit conditions in the coming months. They cautioned, however, that a meaningful recovery in lending will depend on government borrowing needs and overall system liquidity.
