Demand deposits have jumped by 206.83 per cent from N9.67tn in May 2019 to N29.67tn this year’s May, according to data from the Central Bank of Nigeria’s website.
The data showed that the country’s demand deposits grew by 9.31 per cent between May 2019 and May 2020 to N10.57tn, despite global economic uncertainties caused by the COVID-19 pandemic.
The growth continued into 2021 and beyond, surpassing N20tn in early 2023.
Factors contributing to the growth include increased economic activities, government stimulus measures, and enhanced liquidity in the banking system.
An economist at Lotus Beta Analytics, Shedrach Israel, in a conversation with our correspondent on Friday, noted that the surge in demand deposits signified robust consumer confidence and liquidity in Nigeria’s financial system.
“It reflects heightened economic activities, investments, and savings mobilisation within the country, supporting lending activities and stimulating economic growth,” he adds.
However, the rising trend in demand deposits also raises considerations for monetary policymakers, necessitating vigilant monitoring to ensure financial stability, manage inflationary pressures, and sustain long-term economic growth.
Experts noted that while the growth in demand deposits reflected a resilient financial sector, it also required careful management to mitigate potential risks and ensure sustainable economic development.
An analyst at Phemmy Gracey Limited, Olorunfemi Idris, noted that the increase in demand deposits had important implications for the economy, providing banks with more funds to lend and potentially boosting credit availability and economic growth.
However, he also raised concerns about inflation and the potential surge in money supply, which could lead to economic instability if not managed properly.
