Tony Chukwunyem 
Although Nigeria’s private sector is currently grappling with difficult times, businesses in the country will have a chance of surviving if they apply strategic management techniques, embrace innovation and adopt an effective customer engagement strategy, analysts at Cowry Asset Management Limited have said.
The analysts stated this while reacting to the latest Purchasing Managers’ Index (PMI) report from Stanbic IBTC Bank. According to the analysts, the decline in the headline PMI from 50.1 in June to 49.2 points in July, the first time the index slipped below the 50.0 threshold for the first time in eight months, indicating a contraction in the Nigerian private sector, was caused by “high price pressures that have dampened demand, leading to reduced business activity and fewer new orders.”
They further stated: “The data highlights the renewed challenges facing the private sector, where sharp price increases have stifled customer demand, making clients hesitant to embark on new projects.
Of the four sectors surveyed, only the manufacturing sector reported an increase in production, while the others experienced a decline in business activity.
Selling prices surged at the beginning of the third quarter as companies passed on higher input costs to their customers. However, inflation moderated slightly as businesses sought to stimulate sales by reducing their charges.
“July saw a significant increase in both purchase prices and staff costs. Purchase price inflation reached a four-month high, driven by currency depreciation and rising raw material costs.
At the same time, employee expenses continued to rise as companies supported their workers with higher wages, particularly to offset increased transportation costs.
“Despite these challenges, the reduction in demand for inputs and the timeliness of payments helped to shorten suppliers’ delivery times, leading to an increase in stocks of inputs.
Employment levels also saw a slight uptick, with job creation reaching its highest pace in 2024 so far, and backlogs of work were cleared for the second consecutive month.”
Noting that despite a general decline in business confidence, firms remain optimistic about future growth, as reflected in their ongoing expansion plans, the analysts said:
“For Cowry Research, we think that while Nigeria’s private sector is currently facing significant challenges, strategic adjustments in cost management, pricing, innovation, and customer engagement can help businesses navigate the current environment.
The long-term prospects remain promising, with opportunities for growth as the economy stabilises and companies adapt to new market dynamics.”
