Financial analysts at Afrivest West Africa have suggested that only concerted fiscal and monetary policy would resolve the challenge of high inflation in the country.

The analysts also said that the policy should include efforts targeted at resolving insecurity challenges, optimizing exchange rate management, fixing structural loopholes, and curbing reckless fiscal spending.

They said in the company’s 2022 Banking Sector Report Nigeria on Thursday in Lagos that the policy should include efforts targeted at fixing structural loopholes and curbing reckless fiscal spending.

Others include resolving insecurity challenges and optimizing exchange rate management.

It, however, acknowledged that the CBN had taken the lead in the efforts at curtailing the runaway inflation rate as seen in the back-to-back hike of the Monetary Policy Rate in May, July, and September to 15.5 percent.

On the fiscal policy front, it said the divergence between the share of FG’s recurrent and capital expenditure components had widened significantly in the last decade.

On the economy, the report said that in 2021, the Nigerian economy recovered markedly from the pandemic-induced strain of the prior year.

“Real Gross Domestic Product (GDP) grew 3.4 percent from 1.9 percent in 2020, beating our projection by 0.4 basis point.

“The recovery was mainly driven by the expansion of activities in the non-oil sector up 4.4 percent, while the oil sector remained in a recession.

“This growth momentum was sustained into 2022 albeit with a wider divergence between the oil and non-oil sectors,” it said.

The report stated that, given the resilient half-year 2022 performance and expectation of sustained positive performance by key non-oil activity sectors in the third and fourth quarters of the year, it reviewed the 2022 baseline growth forecast upward by 40 basis points to 3.3 percent.

However, it maintained that growth momentum in the medium term would remain short of the level that can meaningfully lift the average well-being of the citizenry due to persistent domestic and external headwinds.

It said the oil price level and domestic inflation rate have remained persistently high, averaging 14.3 percent in the last six years.

In the first half of 2022, headline inflation averaged 16.7 percent owing to the impact of the Russia- Ukraine war on input prices, continued forex illiquidity, and structural challenges.

Based on the World Bank estimate, the stinging fang of the elevated price level would drag five million more Nigerians into extreme poverty (to reach 95.1m) by the 2022 year-end.

In his comments, the Group Managing Director, of Afrinvest West Africa, Ike Chioke, said Nigerians should prepare for reforms that would turn the economy around.

He said that looking ahead, Nigeria was set for another cycle of leadership in 2023 as the tenure of President Muhammadu Buhari, 30 state governors, and over 1,000 legislatures draw to a close.

“At a time when there are daunting fiscal, monetary, and social challenges to surmount, Nigerians cannot afford to elect leaders who lack the competence, capacity, and creativity to find lasting solutions to the national quagmire.

“Even with a leadership that is willing to introduce the needed reforms, the present challenging environment would worsen before it can get better,” Chioke said.

According to him, Nigerians will need to brace for impact, regardless of who the President is.

“Noteworthy, the political will of the incoming administration to implement tough reforms would curtail major economic leakages.

“These leakages include the subsidy regime on PMS which has gulped over N7 trillion since 2010 and ensuring the proper channeling of scarce resources to critical sectors would be a refreshing start,” he added.