Amid Excess Liquidity, Total OMO Subscription Reached N60.33trn in 2025

Kayode Tokede 

On the back of excess liquidity in the financial sector, total subscription to the Open Market Operation (OMO) conducted by the Central Bank of Nigeria (CBN) in 2025 increased to N60.33 trillion, representing a significant increase of 246 per cent when compared to N17.45 trillion in 2024.

OMO is a monetary policy tool used by CBN to regulate money supply and liquidity through buying or selling government securities at the secondary market.

OMO bills also play a central role in helping the CBN influence short-term interest rates and absorb excess cash from the system. By issuing these high-yield bills, the apex bank is able to sterilise liquidity, reduce inflationary momentum, and guide market expectations ahead of its next monetary policy decision.

The total subscription in 2025  is against the U.S. investment bank, J.P. Morgan report that called on investors to exit long positions in Nigerian OMO bills, warning that global risks, driven by falling oil prices and renewed trade tensions, could deepen Nigeria’s macroeconomic vulnerabilities. 

According to financial data released by CBN, the total amount offered to be raised in 2025 stood at N17.44 trillion, which is about 59.2 per cent increase over N10.95trillion in 2024.  

The total successful amount raised in the year under review stood at N26.85 trillion, which is about 98.14 per cent growth over N13.55 trillion raised in 2024.  

Analysis of the CBN data it raised N4.57 trillion in the first quarter of 2025 and about N7.42 trillion in the second quarter 2025.

Throughout Q2 2025, the CBN initiated eight OMO auctions designed to absorb surplus cash from the system and stabilise short-term interest rates. 

Despite offering a total of N4.5 trillion across its standard tenors, demand significantly outpaced supply, reflecting heightened investor appetite for high-yield fixed income instruments.

Parthian Limited in its Q2 2025 financial markets noted that the increased demand for OMO was largely fueled by elevated yields that have made OMO bills  increasingly attractive, particularly to Nigerian banks seeking to bolster their earnings amid lower lending activity.

Major lenders, buoyed by ample liquidity, have been allocating substantial funds—some averaging over N1 trillion—to money market instruments. This trend reflects a broader strategy to leverage favorable interest rates while minimizing credit risk.

However, the strong investor turnout, especially for longer-dated instruments such as OMO, indicates that financial institutions are willing to tie down capital in longer-term securities to capitalise on high yields while guarding against inflation.

Yields in 2024 was more attractive than that of 2025 as the CBN reduced yields to lower government borrowing costs, manage inflation, and align monetary policy with broader economic goals. High yields mean the government pays more to borrow, so cutting them helps reduce debt servicing burdens and encourage lending to the real economy.

The OMO auction comes at a time when Nigeria’s broad money supply (M3) continues to rise sharply, undermining the CBN’s efforts to reduce liquidity through tools like the cash reserve ratio (CRR)–the highest in the world.

According to data released by the CBN, Nigeria’s broad M3 reached N119.04 trillion in October 2025, up from N117.78 trillion in September 2025. This marks one of the highest levels ever recorded, reflecting rapid liquidity expansion despite the CBN’s tight monetary stance

The CBN has been scaling back on elevated discount rates offered on the OMO and NTBs  due to strong demand and the fact that the benchmark interest rate has raced ahead of the country’s headline inflation that has seen decline in recent months. CBN Governor Mr. Olayemi Cardoso had emphasised that OMO is central to Nigeria’s monetary tightening strategy in 2025. He views OMO as a tool to absorb excess liquidity, stabilize the naira, and curb inflation, while assuring investors of Nigeria’s economic.

When the inflation rate was elevated, Cardoso insisted that OMO auctions are necessary to tighten monetary conditions. He has linked OMO directly to the CBN’s broader inflation-targeting framework, alongside the high Monetary Policy Rate (MPR) of 27 per cent.