Nigeria’s sharp rise in price pressures weighed on new business and output growth, while business confidence dropped to the second lowest on record

Nigeria: Private sector activity expanded further in June, albeit at a slower pace as the PMI eased to 53.2 from 54 in May. The decline in the PMI is attributed to a moderation in the pace of output and new sales orders as price pressures increased sharply following the removal of fuel subsidies.

Survey respondents reported that input costs rose at the fastest pace since last August, with petrol prices said to have increased by an average of 176% countrywide. This led to a sharp rise in selling prices as firms passed higher costs on to consumers. Inventory levels were up as companies tried to get ahead of further price increases.

Encouragingly, firms increased employment levels for the second consecutive month due to the increased workload. In terms of the outlook, business confidence dropped to the second lowest on record in June. However, companies remained optimistic that their investments, expansion plans and marketing strategies will lead to an increase in output over the coming year. 

Uganda: The latest World Bank economic update for Uganda estimates the economy will expand by 6.2% in FY2023/24 from 5.7% in FY2022/23 as inflationary pressures ease and the Bank of Uganda adopts more accommodative monetary policy as well as continued investments in the oil sector. This notwithstanding, risks to the outlook are tilted to the downside, stemming from aggressive fiscal consolidation measures, slower-than-expected global growth, further tightening of global financial conditions and possible reduction in concessional finances, tourism and foreign direct investments following the enactment of the Anti-homosexuality Act (2023) in May 2023.  

The report also noted that the economy remains vulnerable to climate shocks, regional insecurity and delays in the implementation of major infrastructure projects. The World Bank warns that the materialisation of these shocks could increase fiscal pressure, jeopardising the planned fiscal consolidation path and raising Uganda’s risk of debt distress from its current moderate level. However, fiscal consolidation measures are expected to reduce the deficit to about 3.5% of GDP in FY23/24 from 5.1% in FY2022/23 and debt-to-GDP to about 50% from 48.9%.