Newly signed coordination agreement between the Federal Ministry of Finance and the Central Bank of Nigeria (CBN) must translate into lower poverty and improved living conditions to make a meaningful difference, the Alliance for Economic Research and Ethics (AERE) has said.

The think tank, in a policy commentary titled “The Wedding of the Two Elephants,” said the Memorandum of Understanding (MoU), signed on September 18, could improve coordination between fiscal and monetary authorities, but warned that macroeconomic stability alone would not be enough to lift living standards.

The agreement covers aligned fiscal and monetary assumptions, structured data sharing, coordinated government financing and joint efforts to tackle inflation, while preserving the CBN’s operational independence.

AERE said the agreement came amid signs of economic improvement, although the gains remained uneven. It noted that the yearly average inflation fell from 33.2 per cent in 2024 to an estimated 23 per cent in 2025, while external reserves closed 2025 at $45.5 billion. FTSE Russell also restored Nigeria to Frontier Market status from September 21.

The group cited that Nigeria’s economy grew by 4.43 per cent year-on-year in the second quarter of 2026, following 3.87 per cent growth in 2025. However, real GDP per capita increased by only 1.9 per cent, which AERE said showed that headline growth was yet to translate into significant improvements for most households.

It also cited the 2022 National Multidimensional Poverty Index, which put 62.9 per cent of Nigerians, or about 133 million people, in multidimensional poverty. It also referenced a World Bank projection that 52.5 per cent of the population would fall below its international poverty line in 2025.

AERE identified the Federal Government’s rising debt-service burden as a major constraint to faster poverty reduction. It is estimated that interest payments consumed 53.2 per cent of government revenue in 2025, up from 40.8 per cent in 2024. The think tank also said banks held government securities equivalent to 22 per cent of their total assets, limiting the flow of credit to small businesses.

To address the pressure, AERE proposed a jointly published Poverty Reduction Impact Dashboard to show how fiscal and monetary policies affect the bottom 40 per cent of earners. It also recommended a legislated plan to reduce interest payments to 30 per cent of revenue by 2028, with the savings redirected to food production, rural roads and primary healthcare.