A new business confidence monitor by the Nigeria Economic Summit Group (NESG) in partnership with Stanbic IBTC says business performances were weakened by high inflation, unaffordable interest rates and foreign exchange instability in October.
The report stated that the Nigerian business environment is characterised by weak performance and a bleak future.
According to the report, the performance of businesses at -23.24 was weaker than the previous month. It noted that the top impediments to growth were inadequate power supply, insecurity and limited access to financing.
The report noted that Nigeria’s business environment faced significant challenges due to persistent inflation, which is raising costs and reducing purchasing power.
The obstacles, it said, include limited access to finance, low employment levels and restricted cash flow, which are pushing up operational costs, discouraging investment and weakening demand.
Naira instability, it observed, is raising import costs and complicating financial planning, with low export performance also affecting profitability.
“The country’s business operating environment continues to face severe challenges, with several underlying economic issues intensifying. Inflation remains high, eroding purchasing power and raising operational costs. Additionally, the Central Bank of Nigeria’s (CBN) hike in the Monetary Policy Rate (MPR) has led to higher credit costs, further straining business operations.
“Also, the naira instability has raised import costs and complicated financial planning, negatively impacting profitability and pricing strategies. Export performance has also weakened, with businesses reporting below normal export order books, resulting in an export index of -12.65.”
The BCM index for the agriculture sector showed a mildly negative business performance at -30.47 points. The report noted that flooding in key food-producing states, worsened by prolonged rainfall in Q4 2024, resulted in extensive losses of farmland, crop yields and grazing areas.
All five agriculture sub-sectors faced negative performance, with the agro-allied sub-sector experiencing only a slight decline at -0.99, while the remaining four sub-sectors suffered significant business performance declines, the report said.
Nigeria’s real sector encountered considerable difficulties in October 2024, as the index fell to -28.72, indicating a negative business performance and a marked decline from the prior month.
“The services index also recorded -6.19 points, indicating mildly negative business performance. The decline highlights increasing operational challenges, mainly due to rising energy costs from frequent national grid failures, ongoing fuel shortages and higher petrol prices,” it said.
Trade reported 23.45 decline indicating mildly negative business performance in the sector.
Within its sub-economic activities, retail also showed a mildly negative performance at -14.99, while wholesale experienced a significant negative performance at -31.9.
