Manufacturers in Nigeria demonstrated a lack of confidence in the country’s economic outlook in August 2024, according to the latest Business Expectations Survey conducted by the Central Bank of Nigeria.
The survey, which included responses from 1,600 business enterprises, found that while several sectors maintained an optimistic view of the economy, the manufacturing sector stood out with a notably negative sentiment.
The report revealed a confidence index of -5.5 points for manufacturing, underscoring persistent concerns about the current business climate and its implications for future growth.
The latest BES coreport nducted by the CBN reveals mixed sentiments across various sectors, including manufacturing, construction, mining, and utilities.
The manufacturing sector registered a negative index of -5.5 points, while construction fared worse with a decline of -10.0 points, indicating significant lack of confidence.
In contrast, sectors such as mining, quarrying, and electricity showed optimism, achieving a positive index of 30.4 points.
This disparity highlights the varied outlooks within different industries in Nigeria’s economy.
The report read “Business sentiment for the Agriculture and Services Sectors was optimistic in the current month, but the Industry Sector was pessimistic. However, all the sectors expressed optimism for the next month. The index of optimism in the Agricultural and Services Sectors were 5.2 and 1.2 points respectively, while that of the Industry Sector stood at -3.9 points.
“For the subsectors, Mining, Quarrying, Electricity, Gas & Water Supply; Non-Market; Market showed optimism at 30.4, 2.7 and 0.7 points, respectively, while Construction and Manufacturing Sectors were pessimistic at -10.0 and -5.5 points, respectively.”
The negative sentiment within Nigeria’s manufacturing sector can be traced to several significant challenges, as highlighted in the latest BES report by the CBN.
The report identifies insecurity, high interest rates, and multiple taxation as the primary constraints impacting business activity.
Additionally, an unfavourable economic climate and insufficient power supply have exacerbated struggles for manufacturers, hindering their ability to operate at optimal levels.
These issues collectively contribute to a declining confidence in current business conditions within the sector.
Despite a challenging outlook for the manufacturing sector in August, businesses across all sectors expressed optimism regarding their expansion plans for September 2024.
The mining and quarrying sector demonstrated the strongest potential for growth, boasting an index of 66.7%.
Meanwhile, the manufacturing sector showed a more moderate interest in expansion, with an index of 47.9%.
This positive sentiment reflects anticipated growth across various industries, including agriculture, market services, and non-market services, suggesting a resilient outlook for Nigeria’s overall business environment.
Despite a pessimistic outlook for August, manufacturers are expressing cautious optimism for the upcoming months. The manufacturing sector anticipates a slight improvement in confidence for September, with a projected index of 7.7 points.
This anticipated uptick signals a potential rebound in business activity, as companies aim to adapt to the challenging operating environment.
Recent reports indicate that Nigeria’s manufacturing sector has experienced a notable contraction in its contribution to the Gross Domestic Product (GDP), declining by 20.95% from the end of 2023 through the second quarter of 2024.
