Nigerian businesses expect naira to depreciate in short term – CBN

Nigerian businesses expect the naira to weaken between now and December but it will appreciate in six months, a recent report by the Central Bank of Nigeria (CBN) says.

The poll of 1,600 businesses showed that they expect the naira to depreciate in July, August and the next three months but appreciate in the next six months, the CBN said in its Business Expectations Survey report.

Since June 2023, the naira has lost about 70 percent of its value against the dollar, when it was allowed to trade freely.

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Several businesses with dollar obligations, including MTN Group Ltd, the biggest mobile operator in Nigeria, suffered losses as those liabilities ballooned in naira terms due to the currency’ devaluation.

The Business Expectations Survey is a monthly check-up on Nigerian businesses from across sectors including manufacturing, construction, energy and services.

The central bank reintroduced the report alongside other macroeconomic reports this month, to facilitate public access to economic indicators and foster economic accountability.

The last Business Expectations Survey report was published in December 2020.

Along with the weakening currency, the firms identified insecurity, high interest rate, insufficient power supply, multiple taxes and corruption as the biggest constraints they face operating in Africa’s most populous nation.

“Their perception of inflation indicated that they consider the current inflation rate of 34.19 percent too high,” the CBN said, in reference to June inflation data.

Nigeria’s headline inflation declined for the first time in almost two years to 33.4 percent in July, according to data released by the National Bureau of Statistics last week.

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However, business owners also indicated optimism that the conditions for doing business in Nigeria will improve in August 2024, and the following six months.

“The expected drivers for the optimism on the macroeconomic conditions in the next month are Mining, Quarrying, Electricity, Gas & Water Supply (35.3 points), Agriculture (9.9 points), Market Services (7.8 points), Manufacturing (6.3 points), and Non-Market Services (4.8 points),” the report stated.