February 6, 2025/CSL Research
The Central Bank of Nigeria (CBN) has released the Business Expectation Survey (BES) for December 2024, covering three key sectors: Industry, Services, and Agriculture. The survey indicates an overall optimistic outlook for the macroeconomy, with a confidence index of 17.0 points in December 2024. Looking ahead, business confidence is expected to strengthen further.
The confidence index is projected at 17.8 points for January 2025, rising to 25.9 points in March 2025, and reaching 29.0 points by June 2025. These indices reflect businesses’ expectations regarding changes in various aspects of their operations in the coming months.A confidence index above 0.0 signifies positive sentiment toward business activities, while an index below 0.0 indicates a negative outlook.
The survey indicates a positive near-term outlook for business activities, with the agriculture sector leading in expansion plans for January 2025. Respondent firms expect the Naira to appreciate throughout the review periods, driven in part by the Central Bank of Nigeria’s (CBN) efforts to enhance transparency and stability in the foreign exchange market. Notably, the introduction of the Electronic Foreign Exchange Matching System (EFEMS) in early December 2024 has played a key role in reducing volatility.
Furthermore, businesses across all sectors remain optimistic about employment growth and expansion. The Mining sector, in particular, stands out as the most confident regarding overall capacity utilization. In December 2024, respondents identified high bank charges as the most significant constraint to business operations. Other major challenges included poor infrastructure, an unfavourable economic climate, insecurity, and limited access to credit.
Recent economic data suggests growing business confidence, as reflected in the latest Purchasing Manager’s Index (PMI) from the CBN, which stood at 51.0 points in December 2024, indicating increased output across sectors. While this signals economic recovery, persistent challenges—such as insecurity, high interest rates, multiple taxes, and inadequate power supply—pose significant risks. If not effectively addressed, these issues could hinder the achievement of targeted economic growth in the medium term.
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