The Afrinvest West Africa Limited, a capital market holding company, has urged monetary and fiscal authorities to rethink their anti-inflation strategies to holistically addressing the ugly narrative of surging inflation rate.
The Managing Director of Afrinvest West Africa Limited, Ike Chioke, made the advice at the unveiling of the 2023 Nigerian Banking Sector Report titled, “Getting Nigeria to Work Again”, on Tuesday.
Chioke stated that both the monetary and fiscal authorities have mainly been fixated on the control of money supply and selective tax reliefs.
He said: “In our view, an effective strategy for taming the high inflation rate would be one that addresses structural bottlenecks (notably, insecurity and infrastructural gaps), improves ease of doing business, and incentivizes large-scale local production of agriculture and manufactured goods alongside effective liquidity management and proper anchoring of market yields to the Monetary Policy Rate (MPR).
“In all, we stress that failure to stem the surging inflation tide in the near term would result in a contagion financial sector crisis and by extension, derail other segments of the economy from the growth path, given banks’ pivotal role as an economic bridge between the supply and demand segments of the economy.”
READ ALSO: Sanusi: CBN must drive down inflation rate
According to the report, Nigeria’s fiscal deterioration has continued unabated. After hitting the N70 trillion mark in 2022 due mainly to the N23.7 trillion addition from securitised Ways & Means liabilities, the total public debt profile nudged higher to N87.4 trillion in the first half of of this year.
It added: “This, in addition to underwhelming revenue performance in first half of 2023 (actual revenue, N4.1 trillion, underperforms pro-rata target by 26.5 per cent, and 99 per cent of it, N4 trillion was used to servicing debt) has further put Nigeria on the cusp of insolvency .
“Against this backdrop, the new administration of President Bola Tinubu has introduced some policy measures to assuage the fiscal pressure, notable amongst which are the ‘partial’ removal of subsidy payment on PMS, the increase in education tax by 50 basis points to three per cent, and the introduction of a 7.5 per cent Value Added Tax on diesel.”
Despite these measures, Afrinvest said it does not see a quick fix to the fiscal pressure in the near-term, given increasing internal and external pressure points on the economy and the time lag required for policy reforms to manifest gains.
On his part, the Chief Executive Officer, Ministry of Finance Incorporated, Dr. Armstrong Takang, said the government took the right step by instituting forex reforms and freeing forex previously used to defend the naira.
Takang said the Federal Government had in the past lost so much forex trying to defend the naira, adding that the implementation of the ‘willing buyer, willing seller’ model has preserved forex for the economy.
He said in its effort to unlock forex liquidity, the Federal Government is encouraging people with genuine forex to bring them back home for investment in the domestic economy.
He said many of the corporate assets are not paying dividend to the government, and that has led to revenue loss.
Takang said: “The International Monetary Fund advised us that domestic resource mobilization is key in our plan to boost revenue.
“Also, many of our corporate assets have not been paying dividends. We have oil and gas assets that are not performing optimally and that has to stop. We need to optimize assets lying dormant to boost capital position.”
The panelists at the event-Amal Hassan, Founder/CEO, Outsource Global; Robert Dickerman, Chief Executive Officer, Pinnacle Oil and Gas; Odunayo Eweniyi, Cofounder/Chief Operations Officer, Piggyvest; Anthony Okungbowa, Head of Service, Edo State Government and Sadiq Kassim, Director, Corporate Affairs, TGI Group, all called on the government to take steps that will boost government revenue earning capacity and boost food security through support for the agricultural sector.
- IPMAN to Nigerians: We have enough fuel, avoid panic buying - December 23, 2024
- 3 Premier League talking points - December 23, 2024
- Honda, Nissan begin merger talks - December 23, 2024
