- A report has revealed that businesses operating in Nigeria faced varying challenges in 2024
- It said businesses report losses, paused expansion plans, shut down, and divested to stay afloat in the year
- The report also stated that the revenue, costs, expenses and salaries of companies took a hit in 2024 compared to 2022 and 2023
Businesses operating in Nigeria faced economic challenges in 2024 due to heightened inflationary pressures, which led to losses, and forced many to pause expansion plans, shut down, and divest their service offerings.
This is according to a recent report by Mustard Insights titled, ‘Nigeria Business Survival Report 2024: Strategies for Sustainable Business Growth Amid Economic Turbulence,’ which derived its findings from extensive research and an in-depth survey of over 100 business leaders, entrepreneurs, and industry stakeholders.
The report shows that 85.4 per cent of companies reported a substantial increase in business costs due to inflation, which rose to 34.80 per cent in December 2024, marking the fourth time the inflation figure surpassed a 28-year record in the year.
According to the report, 65 per cent increased the prices of their goods and services to offset rising costs, while 43.7 per cent of business owners reduced their workforce in 2024.
It also found that 41.7 per cent of businesses diversified their product or service offerings to stay afloat and 46.6 per cent of businesses failed to meet growth targets.
Businesses operating in Nigeria faced varying challenges in 2024
“The year 2024 no doubt, was a challenging one for businesses operating in Nigeria, an Africa by extension.
“Headline inflation rose to 34.80 per cent in December, up from 34.60 per cent in November, marking the fourth monthly increase and the highest level in almost three decades.
“The country’s economy also faced significant disruptions following the removal of fuel subsidies, devaluation of the Naira food scarcity, among others.
“These factors contributed to the skyrocketing costs of essential commodities such as food, power, and transportation, making survival a daunting task for both individuals and businesses.
“Many companies had to put their expansion plans on hold, while some were forced to shut down, divest, or report major losses,” the report read.
Analysis of revenue, costs, expenses, and salaries of companies
The report also covers an in-depth comparative analysis of the third quarter (Q3) results for the last three-year period (2022, 2023, and 2024) to assess comparative changes in revenue, direct costs, total expenses, and salaries of a sample of Nigeria’s top-listed companies on the NGX-30.
It stated that the surveyed companies reported higher increases in direct costs in 2024 compared to 2022 and 2023.
“Similar to survey insights where raw material cost was identified as the highest cost element (input costs), analysis of NGX companies reveal a significant increase in costs in the year 2024 compared to 2023 compared to the rise in direct costs from 2022 to 2023.
“While between 2022 and 2023 y-o-y, 70 per cent of listed companies experienced only less than a 50 per cent increase in direct costs, 20 per cent experienced a 51 per cent to 100 per cent increase in direct costs, and only 10 per cent had above 100 per cent increase in costs, in YTD (year-to-date) Q3 2024 compared to the same period in 2023, 80 per cent of companies experienced as much as 51 per cent to 100 per cent increase in costs and 20 per cent experienced above 100 per cent increase in direct costs.
“None of the analysed companies experienced less than a 50 per cent increase in direct costs in 2024,” the report stated.
Inflation: Nigerian businesses experienced worsening conditions in October –Report
Meanwhile, TheRadar earlier reported that the Stanbic IBTC Purchasing Managers’ Index (PMI) for October revealed that Nigerian businesses experienced worsening conditions in the month due to inflationary pressures.
The report noted that cost pressures were triggered, resulting in the sharpest decline in business activities in October for the first time in 19 months to 46.9 from 49.8 in September.
