Businesses in Nigeria think the Naira (Nigeria’s money) will lose value over the next three months starting from July. But after six months, they believe it will start to get stronger.
This information comes from the Central Bank of Nigeria (CBN), which asked businesses about their expectations for July.
The report shows that businesses were more hopeful in July compared to June. The agriculture sector is doing really well and helping the overall growth. Farmers are leading the way!
When asked about the future, businesses were positive about the next month, the next three months, and the next six months.
They think their business activities will grow in the next month, which means they might hire more people.
They believe the Agriculture Sector will hire the most people, followed by Industry and Services.
However, these businesses think the exchange rate (how much Naira is worth compared to other money) will go down except after six months, when they expect it to get better.
They also think borrowing money will become more expensive during all these periods. Plus, they feel the current inflation rate of 34.19% is really high.
The report says, “Businesses think the Naira will lose value this month, next month, and in the next three months but will gain value after six months. The confidence points are -22.6, -16.5, -4.8, and 13.7 respectively.”
“They believe borrowing rates will go up, with confidence points at 15.0, 14.3, 18.3, and 17.4 for all periods. Also, they think the 34.19% current inflation rate is just too high, especially among large companies which feel this the most.”
Why the Naira is Losing Value
The businesses’ predictions about the Naira are based on its recent loss in value.
In the last two months, the Naira has dropped close to N1,600 for 1 US dollar, despite things CBN tried, like selling foreign money to money changers and introducing something called the Retail Dutch System (RDS).
Both CBN and Nigeria’s Ministry of Finance have said that if inflation goes down and the foreign exchange market gets stable, interest rates will go down too.
In July, inflation dropped slightly to just over 33%, the first time in 19 months since December 2022.
Business Growth and Job Opportunities
Businesses said they’re excited about growing their companies in all sectors by August 2024. The Agriculture Sector is leading with 66.9% saying they’ll expand in the next month.
Firms in Construction, Market Services, Non-Market Services, Manufacturing, and Mining & Quarrying also want to grow, with scores of 56.3, 55.2, 50.9, 44.3, and 30.0 points respectively.
With their plans to expand, they’re also positive about hiring more people in August 2024.
A detailed look shows that the Agriculture Sector, with 14.5 points, plans to hire the most next month, followed by Construction (13.9 points), Mining and Quarrying (11.8 points), Manufacturing (6.0 points), Non-Market Services (5.8 points), and Market Services (4.4 points).