The frequent power outages have been identified as one of the most pressing challenges for Nigerian businesses, forcing many firms to depend on alternative energy sources, the latest survey by the Nigerian Economic Summit Group (NESG) shows.
The NESG-Stanbic IBTC Business Confidence Monitor (BCM) is the flagship survey-based report of the NESG, supported by Stanbic IBTC.
The report showed that businesses faced significant growth challenges in the month under review, with inadequate power supply, insecurity, limited access to financing, and the complexity of multiple tax regulations topping the list.
Despite these constraints, businesses in Nigeria recorded a modest improvement in performance during the month, reflecting a seasonal uplift in the business environment.
As a result, the current Business Performance Index for December 2024 came in at +0.77, reflecting a rise in business activities and a moderate improvement compared to -2.74 in November 2024.
These constraints contributed to weak positive outcomes in the general business situation (+23.13) and production levels (+17.80).
Other challenges include the high exchange rate of the local currency against global trading currencies which escalated import costs, adversely affecting profitability and pricing strategies.
Businesses also lamented limited access to financing, which remained a persistent structural obstacle, further hindering business growth throughout the month.
A sub-sectoral analysis for December 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 in the reviewed month.
It was established that structural challenges in Nigeria’s business environment intensified, restraining growth despite higher seasonal demand. 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.
Amid this, businesses identified the high cost of financing as a critical barrier to current performance and future growth expectations.
The most significant negative impacts were seen in reduced investment (-31.46) and declining price levels (-30.86), which severely hampered overall business activity and demand conditions.