Nigeria’s monetary landscape continued its expansion in October 2025, with new figures from the Central Bank of Nigeria (CBN) showing that broad money supply (M3) rose to N119.04 trillion, up from N117.78 trillion recorded in September. This represents a month-on-month increase of N1.25 trillion, or 1.06%, and underscores the continued build-up in system liquidity even as the apex bank cautiously navigates a shifting macroeconomic environment.

On a year-on-year basis, the data points to an even more pronounced expansion. M3 climbed from N107.99 trillion in October 2024 to N119.04 trillion in October 2025, marking an annual increase of N11.04 trillion, or 10.22%. This steady growth in liquidity has come at a time when inflation pressures have begun to ease, giving the monetary authorities room to initiate a modest policy rate cut for the first time in five years.

The growth recorded in October follows the Monetary Policy Committee’s (MPC) landmark decision in September 2025 to reduce the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5% to 27%. The cut, taken against the backdrop of moderating inflation and an improving foreign exchange market, signalled a tentative shift toward policy easing after years of aggressive tightening aimed at curbing inflationary pressures.

Net Domestic Assets Take Centre Stage

A closer look at the components of broad money supply reveals that net domestic assets (NDA) were the primary driver of liquidity growth in October. NDA rose sharply from N76.12 trillion in September to N84.23 trillion in October—an expansion of N8.11 trillion, or 10.65%, within a single month. This marks one of the most significant monthly increases recorded in 2025.

NDA reflects the banking sector’s claims on government and the private sector, along with other domestic financial positions. Such a sharp increase typically signals a rise in government borrowing, growth in credit extended to businesses and households or a reallocation of banks’ portfolios toward domestic investments. In October, the strong expansion in NDA more than compensated for a notable contraction in Nigeria’s net foreign assets.

Net Foreign Assets Decline

Net foreign assets (NFA) fell from N41.66 trillion in September to N34.80 trillion in October, a decrease of N6.86 trillion, or 16.45% month on month. Despite this sharp monthly decline, NFA remains significantly higher than it was a year ago, rising by 67.41% when compared with October 2024. The monthly dip, however, highlights renewed external pressures—possibly related to fluctuations in foreign reserves, exchange rate adjustments, or global market dynamics—while domestic liquidity continues to expand.

M2 and Narrow Money Maintain Stable Growth

Money supply measured as M2 mirrored the overall trend, rising from N117.77 trillion in September to N119.03 trillion in October, representing a month-on-month increase of 1.06%. Year on year, M2 also rose from N107.99 trillion to N119.03 trillion, maintaining the same annual growth rate of 10.22% as M3.

The alignment between M2 and M3 suggests that the bulk of the liquidity expansion originated from traditional channels—such as deposits and credit—rather than more complex financial assets.

Narrow money (M1), which captures cash in circulation and demand deposits, saw a more modest adjustment. It increased from N39.11 trillion in September to N39.35 trillion in October, reflecting a rise of 0.61% month on month. Year-on-year growth in M1 stood at 13.12%, indicating steady expansion in cash-based and current account transactions.

A Delicate Balancing Act for the CBN

The combined data paints a picture of an economy experiencing buoyant domestic credit activity while grappling with external vulnerabilities. The strong rise in NDA suggests intensified liquidity creation within the domestic financial system, even as NFA declines.

Given this backdrop, the MPC’s November decision to maintain the MPR at 27% reflects a cautious approach aimed at preventing excessive liquidity from eroding recent progress in taming inflation. By holding rates steady after September’s initial cut, the central bank appears committed to striking a balance between supporting economic recovery and safeguarding macroeconomic stability.

Overall, the October 2025 money supply numbers highlight shifting liquidity dynamics driven largely by domestic financial activity. As Nigeria continues to manage the ripple effects of global uncertainties, exchange rate adjustments and internal credit expansion, the CBN’s measured policy stance remains critical in ensuring that liquidity growth does not reverse the hard-won gains in price stability.

Sovereign Trust Insurance Plc has taken a major step toward strengthening its financial position and meeting new regulatory requirements, with its Board of Directors approving an initial capital raise of N5 billion through a Rights Issue. The approval, announced after a board meeting chaired by Mr. Abimbola Oguntunde, marks the first phase of a larger N20 billion recapitalisation programme designed to align the company with the recently enacted Nigerian Insurance Industry Reform Act (NIIRA).

The NIIRA framework, signed into law by President Bola Ahmed Tinubu, introduces stricter capital adequacy requirements and demands that insurance firms maintain stronger solvency buffers to protect policyholders and enhance sector-wide resilience. For Sovereign Trust Insurance Plc, the new rules represent both a compliance obligation and an opportunity to expand its underwriting strength in a market that is becoming progressively competitive.

In a regulatory filing with the Nigerian Exchange (NGX), the company stated that the N5 billion Rights Issue reflects its proactive approach to the unfolding industry reforms. According to the filing, the capital raise is expected to be completed within the first quarter of 2026. The company has already begun consultations with issuing houses, auditors, legal advisers, and other transaction parties to ensure a seamless process once the offer officially opens to existing shareholders. Regulatory approval processes are also in their final stages.

The decision to launch the Rights Issue follows resolutions passed at the company’s 30th Annual General Meeting held on September 25, 2025. At the meeting, shareholders endorsed a capital raise of up to N20 billion—signaling widespread investor support for management’s long-term strategy. Shareholders also approved a dividend of five kobo per share, a gesture that project confidence in the company’s fiscal discipline despite the impending capital restructuring.

Market reaction in the weeks following the AGM was notably positive. The company’s shares recorded significant gains on the NGX over multiple trading sessions in October 2025, reflecting heightened investor interest and renewed optimism regarding Sovereign Trust Insurance Plc’s growth prospects under the NIIRA regime.

In a statement signed by Mr. Segun Bankole, Head of Corporate Communications & Investor Relations, the company emphasized that the Rights Issue aligns with global best practices in capital management. The additional funds will enhance liquidity, boost operational flexibility, strengthen the balance sheet, and enable the company to expand its underwriting capacity—particularly in high-growth segments of the insurance market.

Managing Director and Chief Executive Officer, Mr. Olaotan Soyinka, reaffirmed management’s commitment to positioning Sovereign Trust Insurance Plc among the top five insurance companies in Nigeria. He encouraged shareholders to take full advantage of the Rights Issue once it opens, stressing that the recapitalisation will support ongoing initiatives around innovation, digital service delivery, and improved customer experience. According to Soyinka, these strategic pillars—digital transformation, market agility, operational efficiency, and underwriting excellence—remain central to the company’s mission to deliver long-term value.

Earlier in September, the company had indicated that the broader N20 billion capital raise could be executed through a combination of public offerings, private placements, and rights issues, either within Nigeria or in international markets. Pricing and valuation, the company said, would be determined through book building and other industry-recognized valuation methods.

As regulatory reforms reshape Nigeria’s insurance landscape, Sovereign Trust Insurance Plc’s early move to meet compliance targets positions it for stronger market presence. With the upcoming Rights Issue and the broader recapitalisation programme, the company aims not only to meet statutory requirements but to secure future growth in a sector increasingly defined by capital strength, digital innovation, and customer-centered service delivery.

The Central Bank of Nigeria (CBN) surprised nearly everyone when it announced its decision to hold the Monetary Policy Rate (MPR) at 27%, retain the liquidity ratio at 30%, and maintain the unusually high Cash Reserve Requirements (CRR) across the banking sector. This outcome diverged sharply from market expectations. Many analysts polled by Nairametrics anticipated a rate cut—some predicting a reduction of as much as 200 basis points—on the back of easing inflation and improved FX stability.

Yet, Governor Yemi Cardoso and his Monetary Policy Committee (MPC) held their ground. The decision initially seemed odd, perhaps even overly cautious, but a closer look at economic conditions reveals clear logic behind the move. The policy stance reflects an effort to protect fragile gains, manage excess liquidity, and guard against global uncertainties that still pose serious risks.

Inflation Is Slowing—But Not Yet Secure

Cardoso emphasized that Nigeria is at a critical point in its inflation fight. The CBN’s outlook indicates that aggressive tightening over the past year is finally working. For the first time in months, inflation numbers for October showed deceleration across all major components—headline, food, and core inflation.

However, the MPC believes these improvements remain vulnerable. In the Committee’s view, inflation appears to be heading downward, but the foundation of that progress is not strong enough to justify easing monetary conditions. The overriding goal, Cardoso explained, is to “sustain the progress made so far toward achieving low and stable inflation.”

This is what led the MPC to cautiously maintain the benchmark rate at 27% while quietly tweaking the standing facility corridor. The CBN reduced the rate at which banks borrow (Standing Lending Facility) by 200 basis points and lowered the rate paid on deposits (Standing Deposit Facility) by another 200 basis points. This technical adjustment offers relief to banks without signaling broader monetary easing.

Global Risks Still Matter

Another major factor in the decision lies outside Nigeria’s borders. Cardoso flagged “lingering global uncertainties”—geopolitical tensions, supply chain disruptions, and unpredictable monetary policy shifts among advanced economies. These risks threaten emerging markets like Nigeria that depend heavily on capital inflows, commodity prices, and stable FX conditions.

The CBN’s concerns suggest that while inflation is cooling on paper, the real economy is still under pressure. Businesses continue to grapple with high operating costs, elevated energy prices, and fragile consumer demand. The MPC sees a mismatch: headline inflation has softened, but the economy has not yet fully absorbed the benefits.

The Hidden Issue: Excess Liquidity

Beneath the official statements lies a more uncomfortable truth that analysts have long highlighted—Nigeria is struggling with an oversupply of money. The money supply has ballooned to more than N117 trillion as of October 2025, fuelled by:

• years of Ways and Means financing,

• intervention funds that have not been fully sterilized, and

• large FX revaluation gains from the naira’s sharp depreciation.

In particular, net foreign assets surged from N4.9 trillion to N34.8 trillion in just a year. As corporates and investors revalued dollar-denominated assets following the naira’s fall from about N750/$ to N1,800/$, the liquidity injection intensified.

Cutting rates in an environment already flooded with liquidity would, in the CBN’s view, be reckless. The Bank wants to avoid pouring more fuel into an overheating system, especially when FX stability has been partly supported by high-yield OMO bills near 22%.

FX Stability Takes Priority

The CBN now appears more concerned with preserving the fragile stability in the FX market than with offering cheaper credit. Foreign investors, who are key to sustaining FX liquidity, still demand high yields. Any hint of monetary easing may undermine confidence, weaken the naira, and reverse months of stabilization.

Simply put, the MPC is not ready to trade FX stability for growth.

Implications for Borrowers

For businesses and households hoping for lower interest rates, the message is clear: the wait continues. The CBN insists that previous rate hikes have not fully filtered through the economy. It wants to see the full impact before loosening policy.

The earliest realistic window for a rate cut is February 2026, contingent on:

• sustained inflation decline,

• reduced liquidity pressure, and

• a calmer global environment.

The Logic Behind a “Weird” Decision

The MPC’s move may appear strange at first glance, especially after months of tightening. But Nigeria’s economic fundamentals are still fragile:

• Inflation is easing, but money supply is dangerously high.

• The naira is stable, but external risks remain elevated.

• Businesses are recovering, but the impact of high borrowing costs persists.

In this context, holding rates at 27% reflects strategic caution. Cardoso’s CBN is prioritizing long-term stability over short-term expansion. Beneath the headline, the policy stance blends firmness with subtle flexibility—tight on the surface, more accommodative at the margins.

Ultimately, the decision may be unusual, even uncomfortable, but for an economy wrestling with excess liquidity and global volatility, “weird” may be exactly what is needed.

The Nigerian equities market staged a modest but welcome comeback on Tuesday, November 25, recovering from six consecutive sessions of sustained losses. The market added N95 billion in value as the Nigerian Exchange (NGX) reversed its recent bearish trajectory, lifting the total market capitalization to N91.441 trillion. Similarly, the benchmark All-Share Index (ASI) inched up by 148.52 points, or 0.10%, closing at 143,763.13 points.

This rebound—though marginal—was largely driven by renewed interest in select bellwether and mid-tier stocks. Gains reported in GTCO (+1.4%), Sterling Financial Holdings (+9.0%), First Bank Holdings (+1.5%), and UACN (+7.2%) supported overall sentiment and helped pull the market back into positive territory. As a result, the Month-to-Date (MtD) loss slightly moderated to -6.7%, while the Year-to-Date (YtD) performance improved further to +39.7%, underscoring the market’s resilience despite bouts of volatility.

Market Performance Overview

Tuesday’s session recorded mixed trading activity across the broader market. Total trading volume fell by 20% to 556.15 million units, while the value of trades amounted to N18.71 billion across 19,500 deals. FirstBank Holdings was the most actively traded stock in terms of volume with 93.72 million units, while STANBIC led by value at N3.21 billion.

Sectoral performance was mixed as well. The Banking Index rose by 0.4%, reflecting renewed appetite for financial stocks, while the Insurance and Oil & Gas indices declined by 0.8% and 0.2% respectively. The Industrial Goods and Consumer Goods indices were unchanged, showing little movement during the session.

CBN’s Monetary Policy Retention Boosts Market Sentiment

The market’s positive turn was largely tied to investor reaction to the outcome of the Central Bank of Nigeria’s (CBN) 303rd Monetary Policy Committee (MPC) meeting, where policymakers opted to retain all key monetary parameters. Many traders interpreted this decision as a signal of short-term macroeconomic stability.

According to Mr. Tajudeen Olayinka, CEO of Wyoming Capital and Partners, the unchanged policy stance offered investors clarity after weeks of market uncertainty. He noted that maintaining the benchmark interest rate helped restore confidence among cautious investors, prompting renewed interest in fundamentally strong, mid- and large-cap stocks.

The retained monetary parameters are as follows:

• Monetary Policy Rate (MPR): 27%

• Cash Reserve Ratio (CRR): 45% for commercial banks, 16% for merchant banks

• Public sector deposits (non-TSA): 75% CRR

• Liquidity Ratio: 30%

These parameters reflect the CBN’s continued efforts to balance inflation control with financial stability, particularly in a period marked by elevated liquidity levels and high domestic interest rates.

Market Breadth and Top Movers

Market breadth closed positive, with 26 gainers outperforming 20 losers. Among the top performers were NCR Nigeria (+9.98%), Ikeja Hotel (+9.86%), Prestige Assurance (+9.56%), Eunisell Interlinked (+9.49%), and SterlingNG (+8.96%). Conversely, Union Dicon and Caverton both shed 10%, topping the losers’ list, followed by Sunu Assurance (-4.78%), Lasaco Assurance (-4.58%), and AXA Mansard (-4.23%).

Despite the day’s positivity, the slowdown in overall market activity suggests that investors are still trading cautiously, awaiting stronger macroeconomic signals before making large directional moves.

Outlook

Analysts at Cordros Capital expect the CBN’s decision to maintain monetary policy rates to sustain investor confidence in the near term. However, they warn that market direction will continue to hinge on the strength of corporate earnings, liquidity conditions, and the broader economic environment. While policy stability provides a supportive backdrop, the market is likely to remain sensitive to macroeconomic data releases and global financial conditions.