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Hope on the Horizon: Signs of Progress in Nigeria’s Business Sector

As Nigeria steps into 2025, the business environment is exhibiting tentative signs of improvement, sparking cautious optimism for a better future. While structural challenges persist, recent data from the NESG-Stanbic IBTC Business Confidence Monitor (BCM) highlights a modest uplift in business activity in December 2024, thanks to the seasonal surge during the festive period. 

For the first time since the BCM’s inception in September 2024, Nigeria’s Current Business Index recorded a positive net balance of +0.77, up from a decline of -2.74 in November. This shift marks a significant milestone, albeit one heavily influenced by the temporary increase in commercial activity typically associated with the end-of-year holidays. 

A Sectoral Breakdown

Despite the overall improvement, a closer look at the data reveals mixed outcomes across Nigeria’s key sectors: 

  1. Agriculture (+13.93): The sector emerged as a bright spot, demonstrating resilience amidst challenges. 
  2. Non-Manufacturing (+5.80): Marginal gains suggest cautious growth prospects. 
  3. Manufacturing (-2.43), Services (-3.46), and Trade (-5.59): These sectors struggled, reflecting persistent headwinds from high operational costs, reduced consumer demand, and currency instability.  

While December’s uplift offers a glimmer of hope, businesses continue to navigate an array of structural challenges that dampen their performance: 

  • Rising Costs of Doing Business: The Cost of Doing Business Index surged by +50.32, driven by inflation, exchange rate volatility, and escalating energy costs. Power shortages forced many businesses to rely on expensive alternative energy sources, further straining budgets. 
  • Limited Access to Affordable Financing: Although credit availability improved slightly (+8.25), high financing costs remain a significant barrier, limiting investments and stifling growth. 
  • Regulatory Complexity: The burden of multiple tax regulations continues to weigh heavily on businesses, compounding the operational difficulties they face.

Survey participants expressed cautious optimism for the months ahead, with the Future Business Expectation Index at +28.61 in December, slightly down from +33.17 in November. Expectations for Q1 2025 suggest potential improvements across all sectors, with notable optimism in: Non-Manufacturing, Agriculture and Manufacturing

Economic forecasts also point to better days ahead. The removal of fuel subsidies and the liberalization of the foreign exchange market are expected to stabilize the economy gradually. By late 2025, lower inflation levels and improved fiscal conditions could create a more accommodating environment for businesses to thrive. 

While December 2024’s performance provides a reason for cautious hope, it also serves as a reminder of the work that lies ahead. Addressing deep-rooted challenges such as power shortages, inflation, and regulatory inefficiencies will be critical to sustaining and expanding these gains. 

The road to recovery is rarely linear, but the resilience of Nigeria’s business community offers a beacon of possibility. If structural reforms continue to gain traction and businesses maintain their adaptability, the future could indeed hold brighter prospects for Nigeria’s economy.

 Damilola Soyomokun

A content writer, a statistician and a tech enthusiast

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