Rising inflation, others pose a threat to businesses in 2025, say NESG-Stanbic IBTC

Nigerian Economic Summit Group (NESG) in collaboration with Stanbic IBTC have raised concerns that rising inflation, high interest rates, and weakened consumer purchasing power remain key risks, potentially tempering the strength of the recovery of businesses in 2025.

The two organizations in reported titled, “Business Confidence Monitor”  expressed  that , “ While businesses anticipate improved performance in the first quarter of 2025, concerns over rising inflation, high interest rates, and weakened consumer purchasing power remain key risks, potentially tempering the strength of the recovery of businesses in the year.”

NESG- Stanbic IBTC disclosed that the Business Expectation Index stood at +67.20 in January 2025, reflecting moderate optimism across sectors regarding the future business environment. “This marks a significant improvement in business sentiment compared to December 2024, when the index was much lower at +28.61. 

“The notable rise in optimism suggests growing confidence in economic recovery despite persistent macroeconomic challenges.

“Positive sentiment was evident across all major sectors, though the degree of confidence varied. 

“The Services sector recorded the lowest optimism at +14.39, reflecting cautious expectations due to ongoing structural constraints and cost pressures. 

“In contrast, the Trade (+34.35), Agriculture (+35.87), Non-Manufacturing (+50.07), and Manufacturing (+57.31) sectors demonstrated stronger, yet still moderate, confidence in near-term business performance. Encouragingly, sentiment improvements were broadly consistent across industries, mirroring trends observed in December 2024.”

NESG- Stanbic IBTC noted that several key indicators reinforced this positive outlook. 

“The general business index climbed to +57.86, indicating an overall positive sentiment for the next one to three months, albeit with a measured tone. 

“Other supporting indices included the demand condition index (+30.03), investment index (+69.46), spare capacity index (+31.53), financial results index (+52.52), supply order

index (+39.82), and price expectations index (+33.36).

“The strongest drivers of optimism were the production index (+75.22), export index (+17.71), operating profit index (+54.40), cash flow index (+70.27), and employment index (+73.20), suggesting expectations of increased business activity and improved financial outcomes,” the report added. 

Despite a weak recovery in January 2025, Nigeria’s business environment began the

year on a positive note. 

The NESG-Stanbic IBTC Business Confidence Monitor’s (BCM) Current Business Index rose to +5.69 from +0.77 in December 2024, reflecting an uptick in commercial activity typical of this period.

The report explained that, “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).”

They also raised concern over 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,” the report hinted.