The latest NESG-Stanbic IBTC Business Confidence Monitor has indicated that frequent power shortages, limited foreign exchange availability, and access to finance were the top challenges for businesses in January.
According to the report, despite these challenges, businesses in Nigeria saw a modest performance boost, indicating a better environment and potential growth in 2025, with the January 2025 Business Performance Index rising to +8.12, up from +0.77 in December 2024.
The NESG-Stanbic IBTC BCM report is a pool of economic indicators that measure the current business condition and the extent of optimism or pessimism that business managers feel about the general state of the Nigerian economy as it affects key business decisions within three months.
The NESG-Stanbic IBTC Business Confidence Monitor’s Current Business Index rose to +5.69 from +0.77 in December 2024, reflecting an uptick in commercial activity typical of this period.
“A sub-sectoral analysis revealed broadly subdued outcomes, with negative performances in non-manufacturing (-4.64), services (-1.40), trade (-0.84), and manufacturing (-0.66). However, these sectors showed relative improvement compared to December 2024. In contrast, agriculture recorded a weakly positive performance at +10.86. Structural challenges in Nigeria’s business environment eased slightly, supporting the improved business performance observed during the month. Exchange rate stability and moderated price increases led to a slower rise in operational costs and consumer prices. The cost of doing business index declined to +47.58 from +50.32 in December, signalling reduced pressure on business growth.
“Access to credit improved slightly (+31.98) due to increased commercial activity at the start of the financial year. However, high financing costs remained a critical constraint on both current performance and future growth expectations. The most significant negative impacts were reduced investment (-27.50) and declining price levels (-26.62), which severely dampened overall business activity and demand. Frequent power shortages alongside limited foreign exchange availability and restricted access to finance emerged as the most pressing challenges in January, constraining business expansion. These factors contributed to only weakly positive results in the general business situation (+44.82) and production.
levels (+23.74). A key concern remains the high exchange rate of the local currency against major trading currencies, which, alongside rising import costs, continues to erode profitability and disrupt pricing strategies. Limited access to financing persisted as a major structural barrier, further hindering business growth throughout the month,” part of the report read.
The Business Confidence Index indicated that while the inflation rate is expected to decelerate sharply in February due to the high base effect induced by FX depreciation in the corresponding period of last year, a moderation below 30.0 per cent is not anticipated until late Q3:25.
“In addition, we expect headline inflation to settle at 27.1 per cent year-on-year by the end of 2025. However, headline inflation is likely to be high in H1:25; the 2025 average inflation rate may settle at 30.5 per cent y/y.
In our view, this could induce the Monetary Policy Committee of the Central Bank of Nigeria to switch to an accommodative
monetary policy stance in late 2025. Lower headline inflation in H2:24 should support consumer spending, and business activity should also improve as the impact of the government’s two flagship policies (FX liberalisation and fuel subsidy removal) subsides. Overall, we maintain our expectation that the Nigerian economy may grow by 3.5 per cent y/y in 2025 from an estimated 3.2 per cent y/y in 2024,” the report concluded.
