Naira Depreciation And Business Outlook For 2024

Optimism Amid Concerns: Nigerian Businesses Expect Naira Depreciation – CBN Report

Nigerian businesses anticipate further depreciation of the naira this month and into the first quarter of 2025, according to the Central Bank of Nigeria’s (CBN) Business Expectations Survey Report for November 2024. While businesses remain optimistic about the broader macroeconomic environment, they hold mixed views on various economic indicators.

Highlights from the CBN Report:

Naira Outlook:
Businesses project a continued decline in the value of the naira this month and in the next three months. However, they expect a reversal, with the naira appreciating by mid-2025.
Business Activity Sentiment:
While the overall confidence index (CI) signaled optimism for November 2024, firms expressed concerns about specific factors:
- Financial Conditions: Businesses were cautious about financial stability.
- Access to Credit: Limited access to credit remained a significant challenge.
- Capacity Utilization: Businesses reported underutilized resources.
- Order Volume: The volume of total orders was lower than anticipated.
Sectoral Insights:
- The construction sector expressed confidence in its operations.
- Respondents were optimistic about a rise in business activities and total orders for the coming months.
Employment Prospects:
Businesses, particularly in the agriculture sector, plan to expand their workforce in December 2024. This suggests a positive outlook for job creation in key sectors.

Consumer Expectations Show Mixed Feelings

In a parallel Consumer Expectations Survey Report, the CBN revealed that Nigerian households remained cautious about the macroeconomic environment in November 2024.

Rising Costs: Households foresee increased expenses in transportation, rent, vehicle purchases, housing, and healthcare for December.
Price Perception: While the majority (61.1%) acknowledged that non-durable household item prices remain high, they expect these prices to start declining in the short term.

Conclusion

The CBN reports underscore a complex economic landscape where businesses exhibit optimism about the future, despite short-term challenges such as naira depreciation and financial constraints. Similarly, consumers express caution amid rising costs, reflecting ongoing pressures in Nigeria’s economy.

By addressing structural challenges like access to credit and resource utilization, the Nigerian economy could harness its potential for growth in 2025 and beyond.