Nigerian Businesses To Face More Economic Hardship, Higher Cost, Lower Revenues – PwC

Nigerian businesses have been told to brace up for higher costs of doing business and lower revenue following the impact of recent economic reforms by the government.

PriceWaterHouseCooper (PwC) analysts stated this in a report tagged ‘Nigeria Economic Outlook’.

They noted that the continued inflationary growth and rise in the cost of living may slow real economic growth in the medium term.

“Consumer spending may be adversely impacted by the elevated inflation rate (food 25.3% and core inflation 20.3% rates.) and fuel price (140% increase after subsidy removal).”

“Business revenues may decline in the short-term mainly due to direct impact input costs and reduction in disposable incomes.”

“Rise in energy, food, transportation and import costs may dampen consumer spending on non-discretionary items.”

According to the report, economic reforms such as the FX market liberalisation could gradually attract foreign investments and boost capital inflows in the long term.

However, in the short run, investors will likely adopt a wait-and-see approach. This may be a result of the absence of further reforms to strengthen business and economic fundamentals.

It added that a rise in inflation will likely reduce the real yields or returns on investment.