The renewed rally of the naira and a moderation in prices helped to keep the operating costs of businesses in check in January after wild swings , according to the Nigerian Economic Summit Group (NESG).
The Lagos-based private sector lobby group stated, in a business confidence survey done in collaboration with Stanbic IBTC, that the cost of doing business index declined to +47.58 in January from +50.32 in December, signalling reduced pressure on business growth.
“Exchange rate stability and moderated price increases led to a slower rise in operational costs and consumer prices,” the report noted.
The naira which has been steadily strengthening since the Central Bank of Nigeria (CBN) introduced the Electronic Foreign Exchange Matching Systems (EFEMS) and the FX code has been hovering around ₦1,500 to ₦1,520, bringing a glimmer of hope for businesses to plan.
Similarly, consumer prices have shown a decelerating trend on a month-on-month basis despite headline inflation soaring from 34.6 per cent in November to 34.8 per cent in December, 2024.
Prices are also widely expected to further decline on the back of the Consumer Price Index (CPI) rebasing, giving a breather to businesses and households whose spending power has been hammered by rising prices.
The report noted that an increase in commercial activities at the start of the financial year was due to improved access to credit which rose +31.98. It however said high financing costs remained a critical constraint on both current performance and future growth expectations.
The NESG said 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).”
It further stated that the high exchange rate of the naira against major trading currencies, alongside rising import costs, continues to erode profitability and disrupt pricing strategies.
(BusinessDay)
