The NESG-Stanbic IBTC Business Confidence Monitor (BCM) report projects a hopeful decline in Nigeria’s inflation rate, forecasting it to reach 27.1% by December 2025. This offers optimism for businesses and consumers dealing with ongoing economic challenges.
The decline is attributed to structural reforms, despite the ongoing struggles with rising fuel prices and currency depreciation. Inflation pressures have been sharp in 2024, particularly due to the removal of fuel subsidies and the liberalization of the foreign exchange market, which pushed up costs in many sectors.
The report predicts that while inflation will remain elevated in the first nine months of 2025, it is expected to ease toward the end of the year. By December, inflation is projected to drop from an average of 30.5% year-on-year to 27.1%, driven by better fiscal management, exchange rate stability, normalization of petrol prices, and increased agricultural output.
“We expect headline inflation to remain sticky in 9M:25 but settle below 30.0% from September 2025 as high petrol costs get smoothed out,” the report noted. This easing may lead to a shift in monetary policy, with the Central Bank of Nigeria’s Monetary Policy Committee (MPC) potentially adopting a more accommodative stance in late 2025. A possible reduction in interest rates could encourage economic activity and help businesses manage high operational costs.
In business performance, the report observed slight recovery in December 2024, driven by seasonal demand. The Current Business Performance Index rose to +0.77, up from -2.74 in November. Business confidence remained cautiously optimistic, with the Future Business Expectation Index at +28.61, a slight dip from +33.17 in November but still positive.
However, businesses continue to face significant hurdles, including high operational costs, power shortages, insecurity, and limited financing. While credit access has slightly improved, the cost of borrowing remains a major obstacle to investment and expansion.
Despite these challenges, there is renewed hope that improved economic conditions will support growth in sectors like agriculture, manufacturing, and non-manufacturing in the first quarter of 2025.