Despite Forex, Inflation Challenges Operators Confident Of Business Expansion In 2025

Nigerian businesses are poised to make an impressive turnaround in the first quarter of 2025. This will be fuelled by increased business activities in the last three months of 2024, a new report has revealed.

The latest NESG-Stanbic IBTC Future Business Expectations survey revealed a positive index of 33.17, indicating moderately optimistic expectations of business performance improvement in the coming year.

“The expected improvement in the overall business situation, production, short-term investment, financial performance, supply order, and cash flow, which is not unusual for the last quarter of the year, fuels the optimistic expectations,” the report stated.

This expectation however comes amid a fresh 28-year high inflation, naira volatility and high interest rate environment that is forcing businesses to shut down or downsizing their workers.

RELATED: Nigeria’s Inflation Rate Rises To 34.6%

The seemingly tough business condition of the country coupled with rising energy costs and infrastructural deficit is raising the input costs of many firms in Nigeria.

In November, business activities in Nigeria fell for the fifth consecutive month as inflationary pressures remain elevated. This is according to the monthly Purchasing Managers Index (PMI) by Stanbic IBTC Bank which showed the headline index stood at 49.6 in November up from 46.9 in October.

But the report revealed that agriculture, manufacturing and non-manufacturing are the most optimistic sectors with each having 50.20, 38.04, 37.01 positive index while the services and trade sectors showed less optimism.

The general business index reached 22.59, indicating an overall positive sentiment about the future (one to three months), albeit with a measured tone.

Expectations regarding prices, demand, investment, and financial performance remain critical drivers of the cautiously optimistic outlook, the report said.

This sentiment reflects ongoing concerns about rising inflation, high interest rates, and weakened purchasing power, which continue to weigh on business confidence

The survey however revealed that businesses expect an improvement in general business conditions and production levels looking ahead.

“In addition, an uptick in business activities, which was notable in the last quarter of the year, will lead to an improvement in demand conditions and operating profits”.