Nigeria banking liquidity surges 89% to ₦8.06tn in March despite CBN cash mop-up drive

Nigeria’s banking system liquidity surged to ₦8.06 trillion in March 2026, marking an 89.2 per cent increase from ₦4.26 trillion recorded in February, despite aggressive efforts by the Central Bank of Nigeria (CBN) to curb inflation and stabilise the naira by mopping up excess cash.

The sharp rise in liquidity has been driven largely by a significant increase in deposits placed by commercial banks at the CBN’s Standing Deposit Facility (SDF).

Specifically, the surge is attributed to liquidity injections totalling ₦926.30 billion from Open Market Operations (OMO) repayments and primary market repayments. Despite the central bank’s ₦2.36 trillion OMO mop-up, liquidity has remained elevated, raising concerns over interest rate stability and inflationary pressures.

According to sources within the apex bank, the persistent liquidity surplus climbed to about ₦8.06 trillion by late March 2026.

Analysts warn that the continued glut could fuel inflation and exert pressure on the foreign exchange market, suggesting that further policy interventions may be required.

Banks have significantly increased deposits at the CBN’s Standing Deposit Facility, with daily placements recently exceeding ₦8 trillion—more than double the peaks recorded in February 2026.

Large-scale interventions, including a ₦2.36 trillion OMO mop-up conducted on 23 March, resulted only in temporary tightening, as liquidity quickly rebounded due to maturing instruments and ongoing fiscal disbursements, sources said.

The CBN’s aggressive liquidity management has been evident in recent months. In January 2026 alone, the bank drained approximately ₦13.41 trillion from the financial system, nearly five times the amount withdrawn in January 2025.

The apex bank has also intensified OMO sales, which rose to ₦33.12 trillion in 2025—representing a 182 per cent increase from 2024—in a bid to sterilise excess cash in the system.

Despite the high liquidity levels, the Monetary Policy Committee (MPC) recently reduced the benchmark Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent in February 2026, citing 11 consecutive months of declining inflation.

To retain some level of monetary control, the CBN has maintained a high Cash Reserve Ratio (CRR) of 45 per cent for commercial banks, alongside a Liquidity Ratio of 30 per cent.

Meanwhile, inflows from maturing Treasury bills and OMO instruments continue to inject cash back into the system. For instance, ₦2.31 trillion in maturities was expected in the final week of March 2026 alone.

Government spending, including sustained fiscal disbursements and “Ways and Means” advances, has historically contributed to the persistent liquidity surplus.

As the 31 March 2026 recapitalisation deadline approaches, banks have raised more than ₦4.05 trillion in fresh capital, further boosting liquidity levels across the sector.