Local manufacturers have expressed a lack of confidence in the nation’s economic outlook in August 2024. This is according to the latest Business Expectations Survey (BES) conducted by the Central Bank of Nigeria (CBN).

The survey, involving 1,600 businesses, revealed that while many sectors were optimistic about the economy, the real sector was notably pessimistic.

The report highlighted that the manufacturing sector posted a negative confidence index of -5.5 points, reflecting ongoing concerns about the current business climate.

The real sector has suffered heavy losses, exits and collapse, particularly in the last two years with its contribution to the Gross Domestic Product (GDP) witnessing a significant contraction in the last two quarters. It suffered a decline of 20.95 per cent from Q4 2023 up to the end of Q2 2024; highlighting the sector’s vulnerabilities, particularly in the face of ongoing economic and infrastructural challenges.

According to the BES report, sectors like manufacturing, construction, mining, and utilities, had poor sentiments, with the first two showing negative indices of -5.5 and -10.0 points respectively, signaling a significant lack of confidence.

However, sectors such as mining, quarrying, and electricity displayed optimism, with an index of 30.4 points, highlighting the varied sentiments within sectors. “Business sentiment for the Agriculture and Services Sectors was optimistic in the month in review, but the Industry Sector was pessimistic. However, all the sectors expressed optimism for September. The index of optimism in the Agricultural and Services Sectors were 5.2 and 1.2 points respectively, while that of the Industry Sector stood at -3.9 points. For the subsectors, Mining, Quarrying, Electricity, Gas and Water Supply; Non-Market; Market showed optimism at 30.4, 2.7 and 0.7 points, respectively, while Construction and Manufacturing Sectors were pessimistic at -10.0 and -5.5 points.”

The negative sentiment within the manufacturing sector can be attributed to several challenges, with the BES report identifying insecurity, high interest rates and multiple taxation as the primary constraints to business activity. The survey also noted that an unfavorable economic climate and insufficient power supply are contributing to the businesses’ struggles in the country.

These factors have made it difficult for manufacturers to maintain operations at optimal levels, eroding confidence in both current business conditions.

Despite the gloomy outlook for the real sector in August, businesses across all sectors expressed optimism about their expansion plans for September 2024. The mining and quarrying sector showed the highest growth potential, with an index of 66.7 per cent, while manufacturing indicated a moderate interest in expansion with an index of 47.9 per cent. This positive outlook reflected the anticipated growth within several industries, including agriculture, market services, and non-market services.

The employment outlook for September 2024 was also positive across all sectors, according to the survey. The mining and quarrying sector again held the highest potential for job creation, with an index of 13.0 points, followed by the construction sector at 10.0 points, agriculture at 9.9 points and manufacturing at 8.3 points. This indicated that although the manufacturing sector currently faces significant challenges, there is potential for job creation and expansion soon.