Assessing Nigeria’s Business Environment in 2023: A Year of Economic Turbulence

In the year 2023, Nigeria’s business and economic landscape has been fraught with a myriad of challenges that have significantly impacted the country’s overall business climate, leading to far-reaching effects on government policies, foreign exchange, inflation, and job losses. These events have been closely observed and analysed as they unfolded, with the hope that a comprehensive review of the year’s economic performance could provide valuable insights and lessons for the future.

Anchoring this tumultuous year was President Bola Tinubu’s inaugural address on May 29, which introduced a range of economic reforms, including the removal of the fuel subsidy and the abolition of a dual foreign exchange system. While these announcements were met with varying degrees of optimism, they have sparked a whirlwind of reactions, resulting in a high cost of doing business, falling purchasing power, and a general sense of economic uncertainty.

The removal of the fuel subsidy led to a significant spike in petrol prices, with the National Bureau of Statistics reporting a staggering 210.31% year-on-year increase in the price of petrol. This dramatic rise has caused considerable strain on the nation’s citizens, who now face the challenge of navigating through a high-cost landscape while grappling with a scarcity of naira in the economy.

The decision to abandon the controlled foreign exchange system in favour of a free-floating one has also had profound implications for the value of the naira, with reports indicating a dramatic depreciation and shortage of foreign currency. This, in turn, has given rise to a series of job losses in the manufacturing sector, with the number of jobs lost reaching its highest levels in three years.

The impact of these economic reforms has not only been felt by local businesses but has also led to the exit of several multinational companies from Nigeria. These companies have cited challenging operating environments, foreign exchange unavailability, and high cost of doing business as key factors that influenced their decision to leave the country.

The rising inflation rate and increased borrowing have further compounded Nigeria’s economic challenges, with the debt management office reporting a significant increase in the country’s total public debt. This has, in turn, hindered the nation’s ability to finance its development agenda, with a substantial portion of public revenue being allocated towards debt servicing.

In addition to these economic developments, the year also saw Nigeria’s crude oil production reaching an all-time high amidst concerns of crude oil theft incidents. Furthermore, the appointment of a new Central Bank Governor, Dr. Olayemi Cardoso, and his team has prompted observations from analysts regarding the challenges that lie ahead.

As we look back on the tumultuous year that was 2023, it is imperative to draw important insights from the economic events that have shaped Nigeria’s business environment. It is vital that policymakers, business leaders, and citizens alike reflect on the challenges faced and work towards implementing sustainable solutions that can foster economic stability and growth in the years to come.