Festive period boosts Nigerian business activities — NESG

Nigeria’s business activities have recorded a modest improvement driven by the festive period.

This was stated in the NESG-Stanbic IBTC Business Confidence Monitor (BCM), a flagship survey-based report of the Nigerian Economic Summit Group (NESG), supported by Stanbic IBTC.

“Businesses in Nigeria recorded a modest improvement in performance during the month, reflecting a seasonal uplift in the business environment,” the report said.

However, the report stated that while business activity experienced some seasonal growth, overall performance across most sectors in Nigeria remained weak yet positive in December 2024.

The report said as a result, the current Business Performance Index for December 2024 stands at +0.77, reflecting a rise in business activities and a moderate improvement compared to -2.74 in November 2024.

“Businesses faced significant growth challenges this month, with inadequate power supply, insecurity, limited access to financing, and the complexity of multiple tax regulations topping the list,” the report said.

It further stated that businesses anticipate improvements in general business conditions, exports, production levels, and cash flow. “Additionally, demand conditions and investment are expected to improve, driven by new activities typically associated with the start of a new business year.

“The overall outlook across the five economic sectors covered is optimistic, albeit to varying degrees. While two sectors (non-manufacturing industries and agriculture) exhibited moderate optimism, others showed stronger or weaker confidence levels.

“The sector indices revealed the following: Non-manufacturing industries (+40.19), Agriculture (+35.58), and Manufacturing (+23.15) demonstrated relatively higher optimism. Conversely, the Services (+2.79) and Trade (+8.07) sectors expressed more restrained optimism regarding business improvement,” the report said.

The report stated that the overall outlook across the five economic sectors covered is optimistic, albeit to varying degrees.

“While two sectors (non-manufacturing industries and agriculture) exhibited moderate optimism, others showed stronger or weaker confidence levels.

“The sector indices revealed the following: Non-manufacturing industries (+40.19), Agriculture (+35.58), and Manufacturing (+23.15) demonstrated relatively higher optimism. Conversely, the Services (+2.79) and Trade (+8.07) sectors expressed more restrained optimism regarding business improvement,” it said.

The sub-sectoral analysis revealed broadly subdued outcomes, with a negative performance recorded in manufacturing (-2.43), Services (-3.46), and Trade (-5.59). Conversely, weakly positive results were observed in the agriculture (+13.93) and non-manufacturing (+5.80) sectors.

It said structural challenges in Nigeria’s business environment intensified, restraining growth despite higher seasonal demand and elevated inflation and exchange rates drove up operational costs and consumer prices.

“The Cost of Doing Business Index rose sharply by +50.32, underscoring mounting pressures. Access to credit improved slightly (+8.25) driven by response to expanding business activities typical of this period.

“However, businesses identified the high cost of financing as a critical barrier to current performance and future growth expectations,” it added.

The report stated that the most significant negative impacts were seen in reduced investment (-31.46) and declining price levels (-30.86), both of which severely hampered overall business activity and demand conditions.

“Frequent power shortages emerged as the most pressing challenge in December 2024, forcing many firms to depend on alternative energy sources. These constraints contributed to weak positive outcomes in the general business situation (+23.13) and production levels (+17.80).

“Additionally, the high exchange rate of the local currency against global trading currencies escalated import costs, adversely affecting profitability and pricing strategies. Limited access to financing remained a persistent structural obstacle, further hindering business growth throughout December 2024,” the report said.