Key sectors of the Nigerian economy recorded a negative growth in November due to the ongoing headwinds except for agriculture and trade sectors, a new report has shown.
In November 2024, The NESG-Stanbic IBTC Business Confidence Monitor’s (BCM) Current Business Index showed a net balance of -2.74 compared to -23.24 in October, reflecting the adaptation of businesses to the current economic situation.
The sub-sectoral analysis highlighted in the survey revealed subdued outcomes, with negative performance in the Manufacturing sector (-3.65), Non-manufacturing (-3.62), and Services (-2.08). However, modest and weak positive business performance were observed in the Agriculture (+1.17) and Trade (+0.32) sectors.
According to the survey, structural challenges in Nigeria’s business environment persist, driven by high inflation and a depreciating local currency have kept operational costs and consumer prices significantly high in the past months.
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“The Cost of Doing Business Index surged by +51.50, while the Prices Index fell to -32.05, reflecting mounting pressures. The Central Bank of Nigeria’s (CBN) recent hike in the Monetary Policy Rate (MPR) has further exacerbated credit costs, placing additional strain on businesses,” the report said.
The NESG’s survey report emphasised that limited access to financing remains a significant structural barrier, further constraining business performance in November, reflecting a significant reduction in investment (-9.00) and exports (-4.52), both of which hindered overall business activity.
It added that businesses also cited frequent power shortages as the most critical challenge in November 2024, with many firms relying on expensive alternative energy sources, compounded by already high fuel costs.
“Current fuel prices have failed to alleviate the burden on businesses, despite improved demand conditions (+5.38) and production growth (+10.20). Moreover, exchange rate instability has driven up import costs, adversely affecting profitability and pricing strategies,” the report said.
Here is how each sector performed in November 2024
Agriculture sector
In November 2024, the Agriculture sector experienced a slight recovery, reflected in the NESG-Stanbic IBTC BCM index, which rose to 1.17 index points. This marks a modest rebound from the previous month’s decline of -22.22 points.
However, Mixed outcomes across sub-sectors, along with the receding impacts of recent floods on farmlands in critical food-producing regions in Nigeria, shaped the sector’s performance. The ongoing main harvest season and off-season land preparation activities also contributed to increased agricultural business activities in November 2024.
Trade sector
The NESG-Stanbic IBTC Trade BCM index reached +0.32 In November 2024, marking a significant recovery from its October 2024 performance of -23.45. This signals a modest positive business outcome for the sector. However, sub-sector results were mixed.
The Wholesale sub-sector experienced a substantial rebound, rising to +4.98 in November from -31.90 in the previous month. Conversely, Retail recorded an index of -4.35, reflecting a slight improvement from -14.99 in October 2024.
The sector’s capacity to generate employment, particularly in the informal segment drove its improved performance, reinforcing its status as one of Nigeria’s largest employers
Manufacturing sector
The NESG-Stanbic IBTC Manufacturing BCM Index for November stood at -3.65, reflecting a mildly negative business performance. However, this represents a significant recovery from -28.72 recorded in October 2024.
Most sub-sectors also showed improved performance compared to the previous month, except Pulp, Paper, and Paper Products, which exhibited a severely negative performance in November 2024.
The cost of doing business rose by +56.11, while prices stood at -51.53. These figures highlight the continued burden of inflation and high interest rates, which remain significant concerns for businesses.
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Non-manufacturing sector
In November 2024, the NESG-Stanbic IBTC BCM index for Nigeria’s Non-manufacturing sector was -3.62, reflecting a less severe negative business performance compared to -28.16 in October 2024.
This rebound was driven by positive outcomes across all sub-sectors, except Construction and Crude Petroleum, which recorded indices of -3.24 and -21.79, respectively. Leading the positive performers, Other Non-Manufacturing sub-sectors posted an index of +11.45, followed by Natural Gas (+5.83) and Oil and Gas Services (+2.73).
However, businesses grappled with high operating costs, as indicated by a +39.11 index for the cost of doing business. This increase was from high borrowing costs, inflation, exchange rate volatility, and rising energy and logistics expenses, which inflated production costs and discouraged additional investments. As a result, the investment index declined to -59.40, underscoring the lack of confidence in committing new resources to non-manufacturing ventures.
Services sector
In November 2024, the Services sector continued to grapple with several challenges, as reflected by the NESG-Stanbic IBTC Services Business Confidence Monitor (BCM) index, which stood at -2.08 points.
This figure reflects a continued deterioration in business performance, underscoring the persistence of operational difficulties in an environment marked by heightened uncertainty.
The key drivers of these challenges include high energy costs and renewed volatility in the foreign exchange market, both of which have compounded operating and logistics expenses. The rising costs have eroded the competitiveness of businesses, limiting their ability to absorb shocks and maintain profitability.
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