NESG-Stanbic IBTC business performance index fell to 23.24 in October

The Nigerian Economic Summit Group and Stanbic IBTC report has revealed a significant increase in challenges limiting business growth in Nigeria in October. The business performance index dropped to 23.24, indicating a doubled decline from the previous month. Shakirudeen Taiwo, an economist at the Nigerian Economic Summit Group, highlighted the key points from the report during an interview on CNBC Africa. One of the major challenges impacting businesses in Nigeria is the amplified constraints on growth due to policy-induced and structural challenges. Issues such as insecurity, weak infrastructure, and exchange rate fluctuations have intensified, affecting businesses across various sectors. The decline in business performance is alarming as it signals consecutive negative growth, leading to adverse impacts on the bottom line for many businesses. Despite the overall negative outlook, there were some observations of cautious optimism among survey participants, particularly in the manufacturing sector. The upcoming last quarter of the year is expected to bring an increase in economic activities and demand, potentially boosting the manufacturing sector's performance. However, the trade sector remains the most pessimistic, facing challenges such as exchange rate issues, delays in imports, and negative net trade balance. The conversation also delved into the importance of backward integration in the manufacturing sector. While some companies have made efforts towards sourcing inputs locally, there are still dependencies on imports for key components like fertilizers. The reliance on imports contributes to cost pressures for businesses, impacting their bottom line and hindering growth potential. The adverse business environment not only affects profitability but also has implications for job creation. The report highlighted a negative trend in employment levels, with some businesses reporting a decline in hiring. This reduction in workforce is linked to lower production levels as companies face challenges in managing high inventories. The interview with Shakirudeen Taiwo shed light on the intricate challenges facing businesses in Nigeria and the importance of addressing key issues to stimulate growth. The NESG-Stanbic IBTC report serves as a vital indicator of the current business landscape in Nigeria, prompting a call for strategic interventions to support the private sector and drive economic recovery.