Economy
Nigeria Records First Rise in Business Activities in 4 Months
By Dipo Olowookere
For the first time in four months, business activities grew in Nigeria last month, according to the Purchasing Managers’ Index (PMI) of Stanbic IBTC Bank Plc.
In a report made available to Business Post, the lender said the Nigerian private sector recorded an expansion during July, following three successive months of decline as both business activity and new orders increased, but the severity of the coronavirus disease (COVID-19) downturn meant that spare capacity remained evident, leading to a further reduction in employment.
It said the recent surge in prices extended into the second half of the year, with overall input prices rising at the sharpest pace in the survey’s history. In response, firms also raised their output prices at the fastest rate since the survey began in January 2014.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration and the headline PMI for July stood at 50.4 from 46.4 in June.
However, the reading signalled only a slight improvement in business conditions following a severe downturn due to the COVID-19 pandemic.
Signs of improving demand were central to the strengthening of business conditions. New orders increased for the first time in four months. Business activity also returned to growth for the first time since March on the back of higher new orders and an easing of the lockdown.
Despite new orders increasing in the latest survey period, steep declines in previous months meant that excess capacity was still evident. Backlogs of work decreased for the second month running, while firms continued to lower their staffing levels. Employment fell for the fourth successive month, but the rate of job cuts softened from June’s record.
The rate of overall input cost inflation was the sharpest in the survey’s history amid an unprecedented rise in purchase prices. Respondents linked higher purchase costs to currency weakness and shortages of raw materials. Meanwhile, staff costs continued to fall, with panellists reporting wage reductions.
In response to sharply rising cost burdens, companies increased their own selling prices. Moreover, the rate of inflation was the fastest since the survey began in January 2014.
Signs of improving customer demand led companies to expand their purchasing activity and inventory holdings, in both cases for the first time in four months. Stock building efforts were aided by quicker suppliers’ delivery times, reflecting the removal of restrictions on interstate travel and competition among vendors.
Commenting, an Economist at Stanbic IBTC Bank, Mr Gbolahan Taiwo, stated that, “Business activities in the Nigerian private sector returned to expansion territory for the first time since March as output and new orders improved.
“The PMI rose to 50.4 in July from 46.4 in June. Recall the Nigerian government started to ease the COVID-19 containment measures in early May and that has brought about some resumption to economic activities albeit slowly. The output and new orders sub-index expanded for the first time in 4 months at 52 and 52.5 respectively.
“Although we expect business activities in the Nigerian private sector will continue to improve over the coming months, the overall economy will likely still fall into a recession as some parts of the economy, particularly the services sector will still struggle to recover perhaps until a vaccine is found.
“Also, despite the expected quarter-on-quarter growth, the higher base from last year will ensure a year-on-year contraction.
“On a negative front, the employment index remains below the expansion mark of 50 for the fourth consecutive month as companies continue to reduce staffing owing to COVID-19 disruption to economic activities. This will continue to impact negatively on the demand side of growth as aggregate demand and purchasing power of the consumer will remain under pressure.”
By Adedapo Adesanya
Nigerian businessman and chief executive of Dangote Industries Limited, Mr Aliko Dangote, has unveiled plans for a new phase of investments and acquisitions as the conglomerate pushes towards its target of generating $100 billion in annual revenue by 2030.
Mr Dangote disclosed this while receiving a delegation of senior executives from global investment banking and financial services firm Goldman Sachs, led by co-chief executive of Goldman Sachs International and Global Co-Head of Investment Banking, Mr Anthony Gutman, during a tour of the Dangote Petroleum Refinery & Petrochemicals and Dangote Fertiliser Limited complex in Lagos.
Speaking after the visit, Mr Dangote said the refinery and associated industrial facilities underscore the transformative impact of long-term investment in Africa, stressing that the group’s ambitions extend beyond its current strategic plan.
“No matter how we try to explain what we have built, you cannot fully appreciate it until you see it. But this is only the beginning. We need to look beyond 2030.
“The next phase of our journey will include new investments and acquisitions as we continue to scale the business,” he said.
He added that detailed internal modelling had reinforced management’s confidence that the Group’s target of generating $100 billion in annual revenue by 2030 was achievable.
According to him, the projections were based on conservative assumptions and had strengthened the company’s conviction to pursue an even more ambitious long-term growth strategy.
Mr Dangote also revealed that the strong participation of employees in the refinery’s recent private placement reflected growing internal confidence in the company’s long-term strategy and future prospects.
The Goldman Sachs delegation, after an extensive tour of the 700,000 barrels-per-day refinery, described the project as an extraordinary achievement.
“It is extraordinary what Mr Dangote and the whole organisation have achieved. The ambition, the scale of the project, the quality of the project and the culture of the people is very impressive,” the executives said.
According to a statement issued by Dangote Group on Friday, the delegation was led by Mr Anthony Gutman and included Mr Adib N. Zouein, Co-Head of EMEA Emerging Markets Regional Sales and Head of the Middle East and North Africa region for Global Banking & Markets Public; Mr Ryad Yousuf, Global Head of FICC Sales Strats and Structuring; and Mr Jimi Adesanya, Head of Sub-Saharan Africa Sales (excluding South Africa).
The visitors were received by Dangote; Group Vice President, Oil & Gas, Mr Devakumar Edwin; Managing Director and Chief Executive Officer of Dangote Petroleum Refinery & Petrochemicals, Mr David Bird; Group Executive Director, Oil & Gas, Ms Fatima Aliko Dangote; Chief of Staff to the President/CEO, Ibrahim Dikko; Group Chief Branding and Communication Officer, Mr Anthony Chiejina; Group Chief Economist, Mr Hassan Mahmud; Group Chief Strategy Officer, Mr Aliyu Suleiman; and Head of Administration, Dangote Petroleum Refinery & Petrochemicals, Mr Musa Bala, among other senior executives.
By Adedapo Adesanya
The Senate Public Accounts Committee has heard that Nigeria spent N1.16 trillion on fuel subsidy in 2021, while N1.20 trillion was deducted from federation crude oil sales proceeds during the same period.
The disclosure came from the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr Mohammed Bello Shehu, during the committee’s ongoing investigation into the 2021 to 2023 Nigeria Extractive Industries Transparency Initiative (NEITI) audit reports on the oil and gas sector.
According to the commission, crude and petroleum product losses cost N16.2 billion, pipeline repairs accounted for N22.05 billion, while strategic stock holding attracted N6.75 billion.
The revelations come against the backdrop of Nigeria’s long-running fuel subsidy regime, which successive governments maintained to keep the pump price of petrol artificially low despite mounting fiscal pressures.
Over the years, subsidy payments consumed trillions of Naira, significantly reducing revenues available to the three tiers of government and contributing to widening budget deficits.
The issue reached a turning point in May 2023 when President Bola Tinubu announced the removal of fuel subsidy during his inauguration speech, declaring that “fuel subsidy is gone.” The decision followed years of concerns over the rising cost of the programme, allegations of fraud, and repeated recommendations by fiscal authorities and international financial institutions that the subsidy had become unsustainable.
The removal triggered a sharp increase in the pump price of Premium Motor Spirit (petrol), leading to higher transportation and living costs across the country. In response, the federal government introduced a series of palliative measures, including cash transfers, support for mass transit, and wage-related interventions, while arguing that savings from the subsidy would be redirected to infrastructure, education, healthcare, and other critical sectors of the economy.
The commission also argued that the current method of calculating the 13 per cent derivation fund undermines the constitutional intention of the policy.
Meanwhile, the committee stood down the Niger Delta Development Commission’s presentation until next Wednesday to allow lawmakers review its submission.
The committee also expressed displeasure over the absence of the Auditor-General of the Federation, warning that he must appear before lawmakers next Tuesday or face compulsory appearance through the constitutional powers of the National Assembly.
By Adedapo Adesanya
Businesses in the country expect the Naira to gradually appreciate against the US Dollar between now and January 2027, according to the Central Bank of Nigeria’s (CBN) July 2026 Business Expectations Survey Report released on Thursday.
The report showed that the Business Confidence Index (BCI) remained positive throughout the review period despite perceived macroeconomic challenges. It noted that all sectors expressed optimism about the economy, with the electricity, gas and water sector posting the highest Business Confidence Index of 59.4 points and the strongest expansion prospects for August 2026.
According to the report, “In July 2026, the Business Confidence Index was 5.7 points, reflecting continued optimistic sentiment among formal businesses.”
It attributed the positive sentiment mainly to increased demand (22.3 per cent), economic diversification (21.4 per cent), and improved access to finance (15.0 per cent). However, respondents identified inflation (27.7 per cent), energy-related challenges (23.4 per cent), insecurity (22.4 per cent), and heightened geopolitical uncertainties (16.5 per cent) as the major factors weighing on business confidence.
On the outlook by broad sector, the central bank said confidence remained positive across all sectors in July. The Industry sector recorded a modest improvement, with its index rising to 11.5 points from 10.5 points, while the Services sector increased to 3.6 points from 2.9 points.
By contrast, the Agriculture sector recorded a significant moderation, with its index falling to 3.4 points from 12.2 points.
Despite this, the apex bank said the six-month outlook remained upbeat, with confidence indices across all sectors indicating positive expectations over the review period.
On the macroeconomic outlook by region, the report noted a divergence in sentiment, with businesses in Northern Nigeria expressing stronger confidence than their Southern counterparts in July. Nevertheless, respondents across all regions maintained positive expectations for August.
