Mustard Insights released a new report that paints a sobering picture of Nigeria business. The data paints a portrait of an economy grappling with severe headwinds, forcing businesses to make difficult choices, including significant workforce reductions.
According to the “Nigeria’s Business Survival Report 2024: Strategies for Sustainable Business Growth Amid Economic Turbulence,” a staggering 43.7% of businesses surveyed downsized their workforce last year. This grim statistic underscores the immense pressure faced by companies of all sizes navigating a challenging economic climate.
The report, based on surveys of over 100 business leaders and an in-depth analysis of Nigeria’s top-listed companies on the NGX-30, reveals a multifaceted crisis. Soaring costs, primarily driven by inflation, have crippled businesses, forcing them to adapt or risk collapse.
“Similar to survey insights where raw material cost was identified as the highest cost element (input costs), analysis of NGX companies reveals a significant increase in costs in the year 2024 compared to 2023 compared to the rise in direct costs from 2022 to 2023,” the report states.
Indeed, the data paints a stark picture. Between 2022 and 2023, 70% of listed companies experienced a modest increase in direct costs. However, this year, a dramatic shift occurred: 80% of companies witnessed a significant 51% to 100% increase in costs, while a concerning 20% faced a staggering cost escalation exceeding 100%.
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The report highlights the human cost of these economic realities. Job losses inevitably translate to hardship for individuals and families. The emotional toll on employees facing uncertainty and the ripple effects on local communities cannot be ignored.
Beyond job cuts, businesses have employed various survival strategies. A significant 65% resorted to price increases to maintain profitability, a move that inevitably impacts consumers. Furthermore, 41.7% of businesses proactively diversified their product or service offerings to mitigate risks and explore new revenue streams.
However, despite these efforts, the report reveals a sobering reality: 46.6% of businesses failed to meet their growth targets in 2024. This underscores the severity of the challenges facing the Nigerian business community and the urgent need for both government and private sector solutions to address the underlying economic issues.
The Mustard Insights report serves as a crucial wake-up call, highlighting the urgent need for a comprehensive approach to address the multifaceted challenges facing the Nigerian economy. This includes tackling inflation, improving the business environment, and fostering sustainable growth that benefits all sectors of society.
