The Federal Government has been urged to double down on efforts to check insecurity, curb oil theft, tame inflation, anchor market yield on monetary policy rate (MPR) and improve the business environment.

This was contained in the Afrinvest West Africa Limited 2023 Nigerian Banking Sector Report, which was unveiled on Tuesday, in Lagos.

The report titled, ‘Getting Nigeria to Work Again’, stated that Nigerians and the banking industry are on the lookout for a positive and timely turnaround of stifling banking regulations and major monetary indices such as exchange rate, inflation rate, Foreign Portfolio Investment and Foreign Direct Investment flows.

According to the report, it is believed that the sustained high demand for FX in the parallel market due to lingering weak supply in the official market coupled with inefficient processing time would continue to undermine the objective of these measures.

“As regards the impact of the measures on the banking industry, we expect the re-introduction of the willing buyer, willing seller model to support a modest positive upside for the FX transaction income of banks going forward,” the report.

Afrinvest observed that 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 this year.

This, in addition to underwhelming revenue performance in the 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 service debt) has further put Nigeria on the cusp of insolvency.

The report stated that 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.

The report said there was a need for the new Central Bank of Nigeria (CBN) leadership to be geared towards reversing the unorthodox policy measures of the last administration, restoring market confidence in the CBN’s autonomy, and prioritising the core goals of price and exchange rate stability.

Meanwhile, the Managing Director, Afrinvest West Africa Limited, Ike Chioke, has advised monetary and fiscal authorities to rethink their anti-inflation strategies to holistically address the ugly narrative of surging inflation rate.

He explained that both the monetary and fiscal authorities have mainly been fixated on the control of money supply and selective tax reliefs.

Chioke said an effective strategy for taming the high inflation rate would be one that addresses structural bottlenecks, notably, insecurity and infrastructural gaps.

He said others include those that improve ease of doing business, and incentivises 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,” he said.

The Chief Executive Officer, Ministry of Finance Incorporated, Dr. Armstrong Takang, said government took the right step by instituting forex reforms and freeing forex previously used to defend the naira.

He 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.

Takang said that 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 the International Monetary Fund advised the country that domestic resource mobilisation is key in Nigeria’s plan to boost revenue.