Nigerian businesses experienced a slight economic boost in November 2024, but persistent structural challenges kept performance subdued.

According to the NESG-Stanbic IBTC Business Index for November, the Current Business Index was recorded at -2.74, an improvement from October’s -23.24, yet indicative of weak overall activity.

Power Supply and Forex Liquidity Top Business Constraints

Frequent power shortages and inadequate foreign exchange liquidity emerged as critical obstacles for businesses.

Many firms resorted to expensive alternative energy sources to sustain operations amid soaring fuel prices.

“Power shortages remain the most pressing issue,” the report noted, “forcing businesses to rely heavily on costly alternatives.”

Exchange rate volatility also drove up import costs, further tightening profit margins and complicating pricing strategies.

“These challenges have eroded profitability, limiting the capacity of businesses to expand,” analysts explained.

Sectoral Performance Highlights Mixed Outcomes

Sectoral analysis revealed broadly negative trends. Manufacturing and Non-Manufacturing sectors posted declines of -3.65 and -3.62, respectively, while Services recorded -2.08.

Agriculture and Trade showed slight growth at +1.17 and +0.32, buoyed by holiday shopping and harvest activities. Structural barriers were further exacerbated by inflationary pressures and a depreciating naira.

The Cost of Doing Business Index surged by 51.50 points, while the Prices Index dropped to -32.05.

“These figures highlight the mounting costs businesses face as they navigate Nigeria’s challenging economic environment,” the report stated.

High Borrowing Costs Limit Expansion Opportunities

The Central Bank of Nigeria’s recent Monetary Policy Rate hike has raised borrowing costs, deterring firms from accessing credit.

“Though opportunities for expansion exist, prohibitive interest rates have discouraged investment,” the report highlighted.

Investment and export activities were particularly affected, with net balances of -9.00 and -4.52, respectively. Despite these challenges, demand conditions improved marginally (+5.38), alongside production growth (+10.20). However, businesses remain cautious as they brace for the year-end period.

While seasonal activities provided a modest uplift, Nigeria’s business environment remains mired in structural challenges.

Addressing power supply and forex liquidity issues is critical to unlocking broader economic growth in the coming quarters.