CBN: Business Conditions Will Improve Soon
Dr. Olayemi Cardoso -CBN Governor
Business owners in Nigeria are feeling optimistic about the future, expecting better conditions for doing business in August 2024 and the following months, according to the Central Bank of Nigeria (CBN). This positive outlook comes from the CBN’s latest Business Expectations report, released on Wednesday.
Business Optimism in the Coming Months
In August 2024, businesses are expected to perform better, with an optimism index of 7.6 points. The report also shows that this optimism is likely to continue for the next three and six months, with the optimism index rising to 19.3 and 30.7 points, respectively. The CBN stated, “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.
Key Sectors Driving Growth
Several sectors are expected to drive this positive outlook, including:
- Mining, Quarrying, Electricity, Gas & Water Supply: Leading the way with 35.3 points.
- Agriculture: Contributing 9.9 points.
- Market Services: Adding 7.8 points.
- Manufacturing: Bringing in 6.3 points.
- Non-Market Services: Contributing 4.8 points.
The agriculture sector is seen as a major driver of optimism, with expectations of improved business conditions leading to better job prospects.
Despite challenges like insecurity and high interest rates, businesses in Nigeria are optimistic about better conditions ahead, driven by growth in key sectors like agriculture and manufacturing.
Employment Prospects
The report suggests that with the expected increase in business activities, there are better chances for employment, especially in the Agriculture, Industry, and Services sectors. This implies that more jobs could be created as business conditions improve.
Despite the positive outlook, businesses still face significant challenges. The report highlights key obstacles such as:
- Insecurity: Identified as the biggest constraint on business activity in July 2024.
- High Interest Rates: A major concern for businesses seeking loans.
- Insufficient Power Supply: Continues to hinder business operations.
- High and Multiple Taxes: Another significant burden on businesses.
Additionally, respondents expect the exchange rate to weaken in the short term but remain stable in the next six months. However, they also predict that borrowing rates will continue to rise during all periods under review.
Inflation and Business Confidence
The current inflation rate of 34.19% is seen as too high by business owners, which has impacted on overall confidence. In July 2024, the overall business confidence index stood at 0.1 points, a drop of 3.0 points compared to June 2024. Despite these challenges, the outlook for business conditions remains optimistic, with hopes of improvement over the next few months.
Despite facing challenges such as insecurity, high interest rates, and inflation, business owners in Nigeria remain optimistic about the future. With key sectors like agriculture, manufacturing, and services driving growth, there is hope for improved business conditions in the coming months. As optimism rises, there is also potential for increased employment opportunities, signaling a positive shift in Nigeria’s economic outlook.
