The entire stock of currency and other liquid instruments which include cash, coins, and balances held in checking and savings accounts, and other near-money substitutes circulating in the Nigerian economy as of the latest data at end-may 2019 was N34.90 trillion, data from the Monthly Economic Report May 2019 shows.
The analysis of the CBN latest monthly economic report showed that broad money supply (M3)— on month-on-month (MOM) basis rose by 4.0 per cent to N35.17 trillion at the end of April 2019; a 1-percentage point higher than the growth rate of 3.0 per cent at the end of the preceding month. This is largely attributed to the stance of the monetary policy in the review period which remained accommodative following which the Monetary Policy Rate (MPR) was maintained at 13.50 per cent.
The development in the sector reflected the growth of 3.7 per cent and 3.0 per cent in domestic credit (net) and foreign assets (net) respectively, which more than offset the 2.3 per cent decline in other assets (net) of the banking system.
In comparison to December end 2018, broad money supply (M3) grew by 5.4 per cent at end-april 2018, compared with the growth of 1.4 per cent apiece at the end of the preceding month and the corresponding period of 2018. The growth in broad money supply (M3), relative to the level at the end of December 2018, reflected an increase of 19.3 per cent in domestic credit (net), which more than offset the decline of 5.8 per cent and 19.4 per cent in net foreign assets and other assets (net) of the banking system respectively.
Similarly, narrow money supply (M1), on month-on-month (MOM) basis, grew by 2.8 per cent to N11.25 trillion at end-april 2019. However, itwas down by 3.7 per centyearon-year (YOY) and 0.8 per cent at the end of the preceding month. The growth in narrow money supply reflected the 4.1 per cent increase in demand deposits, which more than offset the 3.5 per cent decline in currency outside banks. Over the level at end-december 2018, M1 fell by 4.3 per cent, compared with the decline of 6.9 per cent and 4.9 per cent at the end of the preceding month and the corresponding period of 2018, respectively. The fall in M1 showed a 3.1 per cent and 10.2 per cent decline in demand deposits and currency outside banks, respectively.
“Broad money supply (M3) grew, while narrow money supply (M1) fell in April 2019. Developments in banks’ deposit rates were mixed, while lending rates trended downwards in the review month. The value of money market assets outstanding rose, owing, largely, to the increase in Bankers Acceptances, commercial paper and FGN Bonds outstanding. Activities on the Nigerian Stock Market were bullish in the review month”, the CBN stated in the report.
There have been three consecutive MOM positive growths in quasi-money since end– February 2019 to end-april 2019. On a Month- on-month basis, quasi-money grew by 2.7 per cent to N16.32 trillion at end-april 2019; just as it grew by 2.4 per cent at end-march 2019 and by 3.4 per cent at the end-april 2018.
The development reflected the increase in time and savings deposits of commercial banks. Comparing end-december 2018 to end-march 2019 and end-april 2019, quasi money grew by 3.6 per cent and 6.5 per cent respectively. The increase was attributed to the rise in time and savings deposits of banks. The trend shows the monthly growth rate of narrow money and its cumulative growth rate for end-april 2018 year-to-date (YTD).
From end-february 2019, aggregate credit to the domestic economy (net) grew by 4.0 per cent to N31.70 trillion at end-march 2018; it further grew by 3.7 per cent MOM to N32.90 trillion at end-april 2019. The domestic credit, however, contrasted with 0.1 per cent decline at the end of the corresponding period of 2018. The growth showed an increase of 3.4 per cent and 3.8 per cent in net claims on the federal Government and claims on the private sector respectively.
Comparing end-december 2018 to end March 2019 and end-april 2019, aggregate credit to the domestic economy (net) rose by 15.0 per cent and 19.3 per cent respectively. The increase in aggregate credit to the domestic economy (net) was as a result of 64.4 per cent and 9.6 per cent rise in net claims on the federal government and claims on the private sector respectively.
Similarly, net claims on the federal government grew by 3.4 per cent and 1.1 per cent to N8 trillion at end-april 2019 MOM and YOY respectively, compared with the 21.8 per cent MOM growth at end-march 2019. The growth in net claims on the federal government reflected increase in banking system holdings of government securities. In comparison to end-december 2018, net claims on the federal government rose by 59.1 per cent and 64.4 per cent at end-march 2019 and end-april 2019 respectively.
Banking system credit to the private sector grew by 3.93 per cent to N24.90 trillion at endApril 2019 in contrast to 0.87 per cent decline at the end of March 2019. The development was attributed, wholly to the 4.0 per cent increase in claims on other private sector. Comparing end-april 2019 to the year end of 2018, banking system credit to the private sector grew by 9.64 per cent, compared with the growth of 5.49 per cent at end-march 2019. It, however, contrasted with the decline of 0.1 per cent at the end of the corresponding period in 2018.
Growth Rate of Aggregate Domestic Credit to the Economy
The chart sourced from CBN shows a 13-month trend on aggregate domestic credit to the economy, where MCP, MCG and MAC represent month-on-month changes in credit to private sector, credit to government (net) and aggregate credit (net) to the domestic economy, respectively, while CCP, CCG and CAC, represent the cumulative changes (yearto-date).
The net foreign assets (NFA) of the banking system, on month-on-month basis, declined from end-february by 1.2 per cent to N16.82 trillion in end-march 2019 but were up by 3.0 per cent to N17.32 trillion at end-april 2019. However, NFA declined by 2.8 per cent YOY at end-april 2019.
