Reserve Money Surges by 21.3%, Consumer Credit Down 17.6%

Nume Ekeghe

A report by the Central Bank of Nigeria’s (CBN) has revealed significant shifts in the country’s monetary landscape, with reserve money soaring by 21.31 per cent year-to-date to N30.01 trillion and consumer credit declining sharply by 17.64 per cent to N3.50 trillion.

Reserve money surpassed the 2024 provisional benchmark of N28.27 trillion by 6.16 per cent, driven by a 6.8 per cent increase in liabilities to other depository corporations (LODCs) to N25.46 trillion and a 5.5 per cent rise in currency-in-circulation (CIC) to N4.55 trillion.

 “Reserve money (RM) increased at end-October 2024, reflecting the rise in currency-in-circulation (CIC) and liabilities to other depository corporations (LODCs). Relative to the level at end-December 2023, reserve money rose by 21.31 per cent to N30.01 trillion compared with the level in the preceding period. At this level RM was above the 2024 provisional benchmark of N28.27 trillion by 6.16 per cent.

“The growth in reserve money was occasioned by the 6.8 and 5.5 per cent growth in LODCs and CIC to N25.46 trillion and N4.55 trillion, respectively. At N4,530.90 billion, notes and coins remained the largest component of CIC relative to N4,292.72 billion at end- September 2024. On the other hand, the eNaira decreased by 0.16 per cent to N18.32 billion from N18.35 billion at end- September 2024.

“Broad money supply (M3) grew by 35.85 per cent to N107.66 trillion, spurred by a 49.88 per cent surge in other deposits, which contributed 30.66 percentage points (pp) to the growth. Transferable deposits and currency outside depository corporations also contributed to the expansion, despite a decline in the money multiplier to 3.59 per cent from 3.89 per cent in the previous period,” the report said.

It stated: “Broad money supply (M3) grew by 35.85 per cent to N107.66 trillion at end-October 2024 relative to the level at end-December 2023, despite a decline in money multiplier to 3.59, from 3.89 in the preceding period. From the liability side, the expansion in broad money was due to the growth in other deposits (49.88 per cent), currency outside depository corporations (24.88 per cent), and transferable deposits (13.76 per cent). Other deposits contributed the most to the growth in M3 with 30.66 percentage points (pp), followed by transferable deposits with 4.63 pp and currency outside depository corporations with 1.08 pp. Conversely, securities other than shares declined by 97.43 per cent, slowing the growth in M3 by 0.52 pp.

“On the asset side, M3 growth was driven by expansion in Net Foreign Asset (NFA) and Net Domestic Asset (NDA). At end-October 2024, NFA increased by 114.41 per cent to N20.02 trillion and contributed 13.48 pp to the overall growth in M3 relative to the 185.40 per cent growth and 21.85 pp contribution at end-September 2024. Similarly, NDA grew by 25.36 per cent to N87.64 trillion, with 22.37 pp contribution to the growth in M3. The increase in NDA was due to the 19.37 and 18.24 per cent growth in net claims on central Government and claims on other sectors, contributing of 8.20 pp and 14.40 pp to the growth in M3. Claims on private sector increased by 29.44 per cent, contributing 15.37 pp to M3 growth, while claims on public nonfinancial corporations grew by 12.55 per cent with a 0.50 pp contribution to M3 growth.”

The report added: “Sectoral credit utilisation moderated by 5.13 per cent to N58.37 trillion compared with N58.57 trillion in the preceding month. The Services sector maintained dominance in receipt of credit to key sectors of the economy, utilising 52.57 per cent, followed by Industry and Agriculture which accounted for 43.31 and 4.12 per cent, respectively.

“Consumer credit outstanding declined by 17.64 per cent to N3.50 trillion compared with N4.25 trillion at the end of the preceding month. The decline in consumer credit followed the decline in personal and retail loans to N2.41 trillion (23.49 per cent) and N1.09 trillion (0.91 per cent), from N3.15 trillion and N1.10 trillion, respectively, in the preceding month. However, Personal loans maintained its dominance, accounting for 68.95 per cent of total consumer credit, albeit lower than the 74.14 per cent in the preceding month, while retail loans constituted the balance.”