Nigeria’s manufacturing sector struggled in business performance in December 2024, according to the Business Confidence Monitor report compiled by the Nigeria Economic Summit Group and Stanbic IBTC.
The manufacturing sector struggled despite a slight boost in Nigeria’s Business Confidence in the month under review, the report noted.
According to the report, the Business Performance Index for December 2024 stands at +0.77 up from -2.74 in November, signaling a modest recovery in commercial activity typically linked to the holiday season.
However, the manufacturing sector lagged in performance, with a negative performance score of -2.43.
Whereas other sectors such as Agriculture and Non-manufacturing reported positive outcomes of +13.93 and +5.80 respectively, contributing to the overall positive but cautious business performance.
Other sectors such as Services (-3.46) and Trade (-5.59) also showed weak results.
“While business activity experienced some seasonal growth, overall performance across most sectors in Nigeria remained weak yet positive in December 2024,” the report noted.
Challenges
The report noted that Businesses faced significant growth challenges in December 2024, including:
- Inadequate power supply
- Insecurity
- High inflation rate
- High exchange rate
- Limited access to financing
- Reduced investment
- Complex tax regulations
According to the report, the Cost of Doing Business Index surged by +50.32, suggesting growing pressures on companies across various sectors.
- On the positive side, access to credit improved slightly, with an increase of +8.25 driven by the seasonal rise in business activities,
“Structural challenges in Nigeria’s business environment intensified, restraining growth despite higher seasonal demand. Elevated inflation and exchange rates drove up operational costs and consumer prices. The Cost of Doing Business Index rose sharply by +50.32, underscoring mounting pressures. Access to credit improved slightly (+8.25) driven by response to expanding business activities typical; of this period. However, businesses identified the high cost of financing as a critical barrier to current performance and future growth expectations.”
On shortage of power supply, it was noted that many companies were forced “to depend on alternative energy sources.”
On interest rate, the report stated that “the high exchange rate of the local currency against global trading currencies escalated import costs, adversely affecting profitability and pricing strategies.”
What you should know
- Nairametrics reported that Nigeria’s manufacturing sector experienced a staggering decline in growth in the third quarter of 2024.
- Its year-on-year (YoY) nominal GDP growth plummeted by 90.11%, according to data from the National Bureau of Statistics (NBS).
- Despite the temporary business boost in December due to the festive season, the sector’s performance remained choked by underlying challenges noted above.
