CBN Lists Factors Affecting Businesses in Nigeria, Speaks on Timeline for Solutions
- Entrepreneurs expect that the business climate in Nigeria will improve in August 2024 and the following six months
- With a 7.6 optimism score, business owners predict better business success in August, according to a CBN report.
- The business optimism index was predicted by the top bank to reach 19.3 points during the following three months
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
A recent Central Bank of Nigeria report found that business owners are hopeful that the business environment in Nigeria will improve in August 2024 and the ensuing six months.
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The apex bank's Business Expectations report, which was made public recently, states that company owners anticipate improved business performance in August, with an optimism score of 7.6 points.
The apex bank stated that the business optimism index is expected to be 19.3 points in the next three months and 30.7 points in the following six months, The Punch reported.
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“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 read.
It clarified that the macroeconomic outlook will be bolstered by the following industries: manufacturing, non-market services, agriculture, market services, energy, gas & water supply, mining, and quarrying.
It stated,
“The respondent firms opined that insecurity was the major factor constraining the business activity in July 2024. Other constraining factors are high interest rate, insufficient power supply, and high/multiple taxes.
"Respondent firms expect the exchange rate to depreciate in all review periods except the next six months. However, they expect the borrowing rate to rise in all the periods under review. Respondents also opined that the current inflation rate of 34.19 is too high.”
In July 2024, the overall confidence index stood at 0.1 points, although it dropped by 3.0 points compared to the confidence levels reached in June 2024.
Commenting on this, Charles Abuede, a financial analyst said that businesses, particularly in the Fast-Moving Consumer Goods (FMCG) sector, grapple with reduced sales attributed to declining purchasing power and the substantial devaluation of the Naira.
He added,
"Additionally, challenges in accessing foreign exchange (FX) in the foreign exchange market, coupled with inconsistent FX policies, compel these firms to increase prices, creating a mismatch with consumers' affordability."
Charles Abuede, a financial analyst opined that the onus lies on the monetary and fiscal authorities to put in place friendly policies to aid the management of the fx market.
He noted,
"In saying all these, one thing is major and should be dealt with; crude oil production. If Nigeria can address insecurity and terrorism concerns, oil theft and pipeline vandalism, we can begin to see an increase in our crude oil production to above 2mbpd or even close to 2.5mbpd to aid the increase in fx receipt."
CBN records highest amount of dollars
Legit.ng reported that remittance inflows have increased significantly, according to the Central Bank of Nigeria (CBN), reaching $553 million in July 2024—a 130% increase from the same month in 2023.
Hakama Sidi Ali, the acting director of corporate communications, revealed this in a statement.
Ali claims that the amount is the largest monthly inflow ever and highlights the CBN's continuous efforts to increase market liquidity in Nigerian foreign exchange.
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Source: Legit.ng
