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Business owners in Nigeria are optimistic about an improvement in business conditions in August 2024 and the following six months, according to the Central Bank of Nigeria (CBN).
The optimism was highlighted in the CBN’s latest Business Expectations report, released on Wednesday. The report revealed that business owners anticipate better performance in August, reflected in an optimism index of 7.6 points.
Looking ahead, the apex bank projected an even more positive outlook, with an optimism index of 19.3 points for the next three months and 30.7 points for the next six months.
“Similarly, the outlook for 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 report stated.
The report identified several sectors as key drivers of this positive outlook, including Mining, Quarrying, Electricity, Gas & Water Supply, Agriculture, Market Services, Manufacturing, and Non-Market Services.
“The expected drivers for the optimism in 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 CBN report explained.
In July 2024, respondents showed optimism regarding the overall business outlook in Nigeria, with expectations of improving business conditions. This optimism was particularly driven by respondents from the Agriculture sector.
The positive outlook for the next month, the next three months, and the next six months suggests improved prospects for business activities and, consequently, employment opportunities. The Agriculture sector is expected to have the highest employment potential, followed by the Industry and Services sectors.
However, the report also highlighted some challenges facing businesses in July 2024. Insecurity was identified as the primary constraint on business activity, followed by high-interest rates, insufficient power supply, and high or multiple taxes.
Respondents expect the exchange rate to depreciate in all review periods except for the next six months. Additionally, they anticipate a rise in borrowing rates throughout the period under review. Concerns were also raised about the current inflation rate of 34.19%, which respondents deemed excessively high.
The overall confidence index for July 2024 stood at 0.1 points, marking a slight decline of 3.0 points compared to the confidence levels recorded in June 2024.
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