A recent survey by the Central Bank of Nigeria has identified insecurity as the foremost challenge facing businesses in Nigeria.
The findings, detailed in the CBN’s “Business Expectation Survey,” highlight that insecurity significantly hampers business operations across the country.
According to the survey, insecurity topped the list of constraints, followed by high interest rates, insufficient power supply, multiple taxation, extortion, corruption, and an unfavorable economic environment.
The report notes: “Respondent firms indicated that insecurity was the primary factor limiting business activity in July 2024. Other significant constraints include high interest rates, insufficient power supply, and excessive taxation.”
Nigeria has been grappling with insecurity for years, initially fueled by the Boko Haram insurgency in the Northeast. Although Boko Haram’s influence has diminished, new threats such as banditry and kidnapping have emerged, particularly in the Northeast and Northcentral regions. These issues are severely impacting agriculture and food supply. The Southeast faces its own challenges with secessionist unrest leading to frequent sit-at-home orders that disrupt business.
In response to the escalating insecurity, President Tinubu has proposed a controversial state and community policing model to address the issue.
The survey also reveals varying levels of business confidence across different regions. Businesses in Northern Nigeria generally show greater optimism compared to those in the South.
In the Northeast, businesses exhibit a notable level of optimism. The Confidence Index for the current month stands at 23.6 points, indicating a relatively positive outlook amidst the region’s complex security challenges. This optimism is projected to strengthen over the next six months, with the Confidence Index anticipated to rise to 48.2 points. This upward trend suggests that despite ongoing issues, such as banditry and instability, businesses in the Northeast are hopeful about future improvements and opportunities.
Similarly, the Northwest region reflects an optimistic business environment. The current Confidence Index is 2.4 points, which, while modest, indicates a positive sentiment among businesses. Looking ahead, this optimism appears to be sustained, with future indices showing continued positivity. This outlook could be attributed to factors such as recent improvements in infrastructure or regional economic policies that are fostering a more favorable business climate.
In contrast, the North Central region presents a more mixed picture. The current Confidence Index is -1.7 points, signaling a degree of pessimism among businesses. This negativity could be linked to regional challenges or economic uncertainties. However, there is a cautious optimism for improvement in the coming months. Future indices suggest that businesses are hopeful for a turnaround, with expected increases in confidence over the next three to six months. This potential for recovery reflects an underlying belief in the region’s ability to overcome current obstacles.
The South-South region currently faces a pessimistic business climate, with a Confidence Index of -6.5 points. This negative sentiment highlights ongoing difficulties that businesses in the region are experiencing. Despite this, there is a sense of cautious optimism for the near future. Business owners in the South-South are hopeful that upcoming changes or interventions may help improve the situation and lead to a more favorable economic environment in the short term.
In the Southwest, the current business sentiment is also negative, with a Confidence Index of -1.5 points. This indicates a challenging environment for businesses at present. Nonetheless, there is optimism for future improvements, with businesses expecting better conditions in the upcoming months. This hopeful outlook suggests that despite current struggles, there is confidence in the region’s ability to recover and thrive in the near future.
The Southeast region exhibits the most pronounced pessimism, with the Confidence Index at -18.9 points for both the current month and the next three months. This significant negativity reflects deep-seated concerns about the business climate in the region.
