Amid rising concerns about potential naira depreciation before year-end, business confidence in Nigeria has weakened, with the Central Bank of Nigeria’s (CBN) October Business Expectation Survey (BES) revealing a decline in the Overall Confidence Index (OCI). The OCI fell to 14.5 points from 17.7 points in September, indicating a dip in optimism among businesses operating in the country.
The October BES findings showed a downward trend in confidence for the current month, next month, and over the next six months. The OCI for the current month, next month, and six months ahead declined to 1.4, 4.8, and 21.8 points, respectively, from 3.2, 6.2, and 29 points in September.
Despite the fall in OCI, businesses remain cautiously optimistic about the macroeconomic outlook. “The overall confidence index (CI) on the macroeconomy indicates that businesses were optimistic in October 2024,” the CBN report stated. However, businesses anticipate naira depreciation in the immediate months, although a potential appreciation is expected within the next six months.
Among the primary challenges highlighted by respondents were high-interest rates, insecurity, multiple taxation, inadequate power supply, and a generally unfavorable economic climate. Financial constraints also remain a significant obstacle, with firms citing these factors as limitations to business expansion and profitability.
Optimism among different sectors varied, with Agriculture showing the highest potential for growth and employment in November 2024, according to survey responses. Conversely, the Construction sector appeared more cautious, showing limited plans for hiring in the coming month. Positive outlooks were also noted across other sectors in terms of business volume, total orders, financial conditions, and access to credit.
Reflecting on these constraints, many respondents expressed concerns about the impacts of inflationary pressures and rising operational costs on their businesses. A business leader from the agricultural sector commented, “While we see opportunities for growth, high interest rates and tax burdens are weighing down our potential for expansion.”
The BES findings indicate a mixed outlook for Nigeria’s business landscape as companies continue to navigate economic pressures, with some sectors prepared to adapt and grow while others remain restrained by ongoing economic challenges.
