The Alliance for Economic Research and Ethics Ltd/Gte has called on the Federal Government and the Central Bank of Nigeria, CBN, to ensure that improved coordination between fiscal and monetary authorities leads to better living conditions for Nigerians.
The group made the call in an analysis titled “The Wedding of the Two Elephants: Why Nigeria’s Fiscal-Monetary Truce Must Now Marry Growth to Development,” following the September 18, 2026 Memorandum of Understanding between the Federal Ministry of Finance and the CBN.
The Alliance commended both institutions for agreeing to harmonise their macroeconomic assumptions, strengthen information sharing, coordinate government financing and cash management, and work jointly on inflation while preserving the CBN’s operational independence.
It described the agreement as an important move away from the previous lack of coordination between fiscal and monetary authorities.
However, the group warned that coordination would only be meaningful if economic policies eventually translated into lower poverty, more jobs and better access to essential services.
The Alliance noted that Nigeria’s GDP grew by 4.43 per cent year-on-year in the second quarter of 2026, compared with 3.87 per cent growth in 2025.
Despite this growth, it said real GDP per capita increased by only 1.9 per cent in 2025, indicating that overall economic expansion had not translated into equivalent gains in individual incomes.
The group also cited the 2022 National Multidimensional Poverty Index, which estimated that 62.9 per cent of Nigerians, or 132.92 million people, were living in multidimensional poverty.
It further referenced a World Bank projection that about 52.5 per cent of Nigerians would be below its international poverty line in 2025.
Alliance highlights economic improvements
The Alliance acknowledged some positive developments in the economy, including a reduction in annual-average inflation from 33.2 per cent in 2024 to an estimated 23 per cent in 2025.
It also pointed to Nigeria’s $45.5 billion in international reserves at the end of 2025 and the country’s return to FTSE Russell Frontier Market status from September 21, 2026.
However, the group identified high government borrowing costs as a major challenge to economic development.
It estimated that Federal Government interest payments accounted for 53.2 per cent of government revenue in 2025, compared with 40.8 per cent in 2024.
The Alliance also said banks held government securities equivalent to 22 per cent of their total assets, warning that the concentration could reduce the amount of credit available to private-sector businesses.
Group proposes ‘Poverty Governor’
To make fiscal and monetary policies more responsive to the needs of poorer Nigerians, the Alliance proposed the introduction of what it called a “Poverty Governor” alongside the existing inflation-targeting framework.
Under the proposal, major fiscal and monetary decisions would include an assessment of their likely impact on the bottom 40 per cent of the population.
The group also recommended a legally backed programme to bring government interest payments below 30 per cent of revenue by 2028.
It suggested that any savings generated should be redirected towards food systems, rural roads and primary healthcare.
The Alliance further called for policies that would encourage banks to provide more credit to private businesses and reduce the concentration of bank assets in government securities.
On inflation, it said monetary policy should be supported by measures aimed at increasing supply and reducing costs in the food, energy and transportation sectors.
Among its recommendations were the establishment of strategic grain reserves, improved security along agricultural corridors and logistics reforms to make it cheaper to move food from farms to markets.
The group also urged the Federal Government and CBN to institutionalise their fiscal-monetary coordination framework so that it remains in place despite changes in political leadership and election cycles.
It called for clearer communication to the public about how major economic decisions would affect poverty and household welfare.
According to the Alliance, the success of the September 18 agreement should ultimately be measured not only through economic indicators, but also by whether Nigerians experience improvements in food affordability, employment opportunities, healthcare access and overall living standards.
The group summed up its position by stating: “Growth is a means. Development — human, shared, visible — is the destination.”
Source: Vanguard
