Nigeria’s money supply (M²) fell by 0.8 percent month-on-month (MoM) to N123.4 trillion in January 2025 from N124.4 trillion in December 2025, indicating low liquidity in the banking system despite a decline in interest rate.

Central Bank of Nigeria (CBN) Open Market Operations (OMO) details for January 2026 showed that interest rate on OMO declined by 2.2 percentage points MoM to 17.2 percent as at January 30th 2026 from 19.4 percent as at December 2025.

Data from the CBN’s Money and Credit Statistics for January 2026 released yesterday showed that all M² components declined during the period except narrow money and demand deposits.

Quasi money (highly liquid, non-cash assets that can be quickly converted into cash) fell by 1.2 percent to N81 trillion in January 2026 from N82 trillion in December 2025.

Similarly, currency outside bank declined by 3.7 percent to N5.2 trillion in January 2026 from N5.4 trillion in December 2025.

Likewise, Demand Deposit also increased by 1.14 percent to N37.12 trillion from N36.7 trillion in December 2025.

The decline in M² was also reflected in the net domestic credit as credit to government and private sector which declined during the period.

Further breakdown of the data showed that credit to government fell by 0.11 percent to N34.18 trillion from N34.22 trillion in December 2025.

Credit to the private sector also recorded 0.79 percent fall to N75.2 trillion in January 2026 from N75.8 trillion in December 2025.

This resulted in a net domestic credit of N109.4 trillion in January 2026, representing a 0.59 percent decline from N110.06 trillion in December 2025.

Recall that Nigeria’s public debt stock stood at N153.3 trillion as at September 2025 according to data from the Debt Management Office, DMO.

Borrowing has been a legitimate fiscal financing mechanism but the quality and productivity of debt utilisation ultimately determine sustainability.

Analysts opined that the critical issue is whether borrowed funds are channelled into value-generating capital expenditure capable of expanding the productive base of the economy.

They however reiterated that borrowing should be strategically deployed toward growth-enhancing investments, while governments at all levels strengthen internal revenue mobilisation, leverage areas of comparative economic advantage, and avoid excessive debt accumulation that could heighten medium-term fiscal vulnerability.