Business owners in Nigeria are hopeful that the economic environment will become more favorable for their operations in August 2024 and continue improving over the following six months, according to a recent report from the Central Bank of Nigeria (CBN). The optimism is reflected in the Business Expectations report released by the CBN on Wednesday.
The report revealed that business owners have an optimism index of 7.6 points for August 2024, indicating a positive outlook for business performance. Looking further ahead, the CBN noted that the optimism index increases to 19.3 points over the next three months and reaches 30.7 points for the next six months.
“The outlook for next month, the next three months, and the next six months all indicated optimism with indices of 7.6, 19.3, and 30.7 points, respectively,” the report stated.
The report highlighted several sectors that are expected to drive this optimistic outlook on the macroeconomy, including Mining, Quarrying, Electricity, Gas & Water Supply, Agriculture, Market Services, Manufacturing, and Non-Market Services. Specifically, the report identified Mining, Quarrying, and Electricity, Gas & Water Supply as key contributors to the positive sentiment, with an optimism index of 35.3 points. Agriculture follows with 9.9 points, Market Services with 7.8 points, Manufacturing with 6.3 points, and Non-Market Services with 4.8 points.
The CBN also noted that this optimism is not limited to August but extends into the next three and six months. This sustained positive outlook is expected to lead to improved business activities and better employment prospects, particularly in the Agriculture sector, followed by Industry and Services.
However, the report also identified key challenges that have been constraining business activities, particularly in July 2024. Insecurity was cited as the most significant hurdle, alongside high-interest rates, insufficient power supply, and high or multiple taxes. Business owners also expect the exchange rate to depreciate in most periods reviewed, except for the next six months. Additionally, they anticipate that borrowing rates will rise during the same periods, and they expressed concern that the current inflation rate of 34.19% is excessively high.
In July 2024, the overall confidence index was reported at 0.1 points, showing a slight decline of 3.0 points compared to June 2024 levels. Despite this, the overall outlook remains positive, with expectations of better business conditions in the coming months.
