September 19, 2024/CSL Research
The Central Bank of Nigeria (CBN) recently released the Business Expectation Survey (BES) for August 2024, covering three key sectors: Industry, Services, and Agriculture. The survey was conducted with a sample size of 1,600 business enterprises nationwide, and a response rate of 96.1% was achieved. The overall confidence index for August 2024 was 0.9 points compared to 0.1 points in July 2024. Notably, the confidence indices for upcoming months showed stronger optimism, with 11.1 points for September 2024, 23.1 points for November 2024, and 34.2 points for February 2025. These indices reflect businesses’ sentiments on expected changes in various aspects of their operations over the near future. An index above 0.0 point indicates positive sentiment, while an index below 0.0 point indicates negative sentiment on business activities.
The survey indicates a positive outlook for business activities in September 2024, suggesting improved employment prospects, especially in the agriculture sector, which holds the highest potential for job growth. This is likely due to expectations surrounding the start of the harvest season. A review of the macroeconomic outlook by business type reveals that exporters are the primary drivers of economic optimism, with a confidence index of 17.7 points in August 2024, slightly decreasing to 16.1 points in September 2024. In contrast, importers showed lower optimism, scoring 4.3 points in August 2024 but rising to 8.6 points in September. We attribute this shift to the significant devaluation of the domestic currency which has increased import costs while encouraging export activities. Regarding business challenges, respondent firms identified insecurity as the most significant constraint, followed by high interest rates, multiple taxes, an unfavourable economic climate, and inadequate power supply.
Recent economic data indicates growing business confidence, highlighted by the latest Purchasing Manager’s Index (PMI) from the CBN, which showed increased output across sectors. The headline inflation rate for the month of August also declined for the second consecutive month. While these point to economic recovery, the ongoing challenges—such as insecurity, high interest rates, multiple taxes, and insufficient power supply—remain significant risks. These issues could fuel a resurgence in inflation and hinder the attainment of targeted economic growth.
Click here to read full PDF copy of report
