The inaugural edition of the Business Confidence Monitor (BCM), conducted by the Nigerian Economic Summit Group (NESG) with support from Stanbic IBTC, highlights a significant downturn in the Nigerian business environment for the period of January to September 2024.
The Nigeria Business Confidence Monitor (BCM) was created to help gauge the pulse of Nigeria’s Business Environment.
Nigeria Business Confidence Monitor (BCM), 2024: The Framework
The BCM combines leading qualitative indicators on Production, Investment, Export, Demand Conditions, Prices, Employment, and the General Business Situation to gauge the overall business optimism of the Nigerian economy.
The Business Confidence Survey
The process begins with administering the Business Confidence Survey (BCS), a prominent tool that provides a unique data set for the BCM Report. The survey gathers information on a range of variables that capture the directions of leading indicators across different economic sectors.
Target Respondents
The target respondents for the BCS are business establishments operating in Nigeria that have been engaged in economic activities since the beginning of 2023. The survey is administered to senior managers and business executives.
BCS Questions and Variables Sets
The BCS questions are structured to elicit qualitative responses. The focus of the qualitative information is narrowed down to specific details that gauge production levels, changes in response to policy initiatives or market sentiments, and businesses’ plans and expectations for the future.
Weighting System and BCM Indices
A weighting system is applied to the BCS responses to have indices representing the Nigerian economy and signal the future direction of economic activities. The weighting system captures the differences in sectoral contribution to GDP, industry value-added, employment size, and sample representation.
Nigeria Business Confidence Monitor (BCM), 2024: Key Findings
- Current Business Performance Index:
January to September, 2024 is -11.13. This index reflects a decline in business activity compared to the same period in 2023, indicating widespread challenges across sectors.
- Sector Performance:
- Agriculture: -22.22 (most impacted)
- Trade: -13.21
- Manufacturing: -6.07
- Non-Manufacturing: -5.21
- Services: -2.58 (least negative)
Nigeria Business Confidence Monitor (BCM), 2024: Major Obstacles
Businesses have faced numerous hurdles, with the following issues significantly impacting performance:
- High Prices: -26.14
- Limited Access to Credit: -21.14
- Poor Demand Conditions: -29.73
- Elevated Cost of Business: +47.64 (the largest contributor to negative performance)
- Reduced Production Activities: -14.70
Additional challenges include inadequate foreign exchange availability, poor power supply, and insecurity.
Nigeria Business Confidence Monitor (BCM), 2024: Future Expectations
Despite the current struggles, the BCM shows a Future Expectation Index of +26.86, indicating moderate optimism among business managers. Key sectors exhibit varying degrees of optimism:
- Non-Manufacturing: +30.54 (most optimistic)
- Trade: +24.46
- Agriculture: +23.87
- Manufacturing: +21.28
- Services: +2.54 (least optimistic)
Most businesses anticipate improved conditions in general and production levels, although concerns remain regarding financial conditions and pricing.
This report underscores the importance of timely data for decision-making in an uncertain economic climate, providing essential insights for policymakers, investors, and business leaders navigating Nigeria’s evolving landscape.
Nigeria Business Confidence Monitor (BCM), 2024: Sectoral Insights
The optimistic outlook, though at a cautious level, was consistent across the five (5) economic sectors covered.
Sector indices were +30.54 for Non-manufacturing, +24.46 for Trade, +23.87 for Agriculture, +21.28 for Manufacturing, and +2.54 for Services.
Majority of businesses expect improved general business conditions and production levels while financial conditions, supply orders and prices are expected to retrogress in the near term.
Nigeria Business Confidence Monitor (BCM), 2024: Barriers to Business Environment
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