In February 2025, Nigeria’s trade and manufacturing sectors boosted business activities for the second month, according to the NESG-Stanbic IBTC Business Confidence Monitor. The Current Business Index rose to +11.50, with trade sectors showing significant gains. However, challenges such as high operational costs, credit access deterioration, and investment decline persist, impacting overall business sentiments and future growth.
In February 2025, Africa’s fourth-largest economy experienced a boost in business activities, primarily within the trade and manufacturing sectors, marking the second consecutive month of improvement. This positive development is highlighted in the NESG-Stanbic IBTC Business Confidence Monitor (BCM), a significant survey conducted by the Nigerian Economic Summit Group, with support from Stanbic IBTC.
The Current Business Index saw an increase to +11.50 from +5.69 in January, indicating sustained growth across essential sectors. Notably, the trade sector led these gains with a robust increase of +21.48, followed by manufacturing at +10.35, non-manufacturing at +10.21, services at +7.15, and agriculture, albeit slower, at +2.69.
However, the agricultural sector experienced a slowdown amidst existing challenges. While there have been improvements in various sectors, the cost of doing business remains high at +47.18, fueled by a persistent elevated exchange rate that significantly impacts operational costs and consumer prices.
Access to credit has deteriorated further, with a measure of +24.84, primarily due to unfavorable macroeconomic conditions and reduced commercial activity. This high cost of financing constrains current business performance and negatively affects future growth expectations, limiting expansion opportunities.
Despite the positive indicators, a significant decline in business investment of -39.50 reflects wary sentiment among investors. Concurrently, decreasing price levels at -23.78 have negatively impacted business activity and consumer demand, suggesting that purchasing power remains under pressure.
Key challenges persist in February, including limited foreign exchange availability, ongoing power shortages, unclear economic policies, restricted access to finance, and elevated commercial lease costs. These factors collectively impede business expansion and profitability. The report emphasizes that the high exchange rate of the local currency against global currencies remains a critical issue.
In conclusion, while February 2025 saw notable growth in the trade and manufacturing sectors of Nigeria, which improved the business climate, several challenges remain. These include high operational costs due to elevated exchange rates and limited access to credit, alongside a marked decline in business investment. Addressing these issues is essential for sustaining positive business activities moving forward.
Original Source: businessday.ng
