A recent survey by the Central Bank of Nigeria (CBN) indicates that Nigerian businesses expect the naira to weaken further before beginning to recover in late 2024 or early 2025. This outlook persists despite the CBN’s efforts to stabilize the currency by injecting millions of dollars into the foreign exchange market.
The naira’s ongoing depreciation has contributed to rising inflation, triggering protests across the country. While many businesses are pessimistic about the naira’s short-term prospects, they remain optimistic about the broader economic outlook.
The CBN’s Business Expectation Survey, which polled over 1,600 Nigerian enterprises, revealed that respondents anticipate the naira will continue to depreciate through July, August, and the next three months. However, they forecast a potential appreciation starting in late December or early 2025, with this positive trend likely to continue for six months.
Since the survey was conducted between July 15 and 19, the naira has continued to lose value against the U.S. dollar, despite the CBN’s interventions. The central bank’s strategy of selling U.S. dollars at discounted rates failed to prevent the naira from hitting a record low of NGN1,640 per dollar in July.
The continued depreciation of the naira has exacerbated Nigeria’s inflation, which surged to 34.19% in June. The soaring inflation and declining living standards have sparked widespread protests, resulting in the reported deaths of 17 people. A majority of survey respondents, including large firms, viewed the June inflation rate as extremely high.
Despite concerns about the naira’s immediate future, many businesses expressed a generally positive outlook. The survey highlighted that firms expect an increase in business activities in the coming months, which could lead to improved employment prospects, particularly in the agriculture, industry, and services sectors.
However, respondents also identified several challenges impacting business operations in July 2024, including insecurity, high interest rates, insufficient power supply, and high or multiple taxes.
