Abuja, Nigeria – Business owners across Nigeria are optimistic about better conditions in August 2024 and the coming months, according to a report released by the Central Bank of Nigeria (CBN) on Wednesday. The Business Expectations report reveals a growing confidence among businesses, with an optimism index of 7.6 points for August.
The report indicates that the optimism is expected to strengthen further in the following months. For the next three months, the optimism index is projected at 19.3 points, while a more robust 30.7 points is expected over the next six months.
“Similarly, the outlook for the next month, next three months, and next six months all indicated optimism with indices of 7.6, 19.3, and 30.7 points, respectively,” the CBN report stated.
The report highlights specific sectors as key drivers of this positive outlook, including Mining, Quarrying, Electricity, Gas & Water Supply, Agriculture, Market Services, Manufacturing, and Non-Market Services. These sectors are expected to play a significant role in boosting the macroeconomic landscape.
“The expected drivers for the optimism on the macroeconomy 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 added.
The positive sentiment in the business community extends beyond immediate expectations. The report notes that respondents are generally optimistic about the overall business outlook, particularly in the Agriculture sector, which is projected to have the highest potential for employment growth. The Industry and Services sectors are also expected to see increased employment opportunities in the coming months.
Despite the optimism, the report also highlights several challenges faced by businesses in July 2024. Insecurity remains the primary concern, with other significant constraints including high interest rates, insufficient power supply, and high or multiple taxes. The exchange rate is expected to depreciate in all periods under review, except for the next six months. Additionally, respondents anticipate a rise in borrowing rates during these periods.
The current inflation rate, which stands at 34.19%, is considered too high by the majority of respondents, further emphasizing the economic challenges businesses are navigating.
In July 2024, the overall confidence index was recorded at 0.1 points, a slight drop of 3.0 points from the confidence levels reported in June 2024. Despite this decline, the CBN’s report underscores a cautious yet growing optimism among Nigerian businesses as they look ahead to the latter half of the year.