.Says MSMEs grappling with high inflation, energy costs, forex rate volatility
.Urges FG to prioritize stable power supply, lower energy costs
.As banking, consumer stocks drive N4.5trn market gain in May
The Nigeria Employers’ Consultative Association (NECA) says businesses across the country are yet to fully experience the expected benefits of the Federal Government’s ongoing economic reforms.
Mr Adewale-Smatt Oyerinde, Director-General of NECA, said this in an interview with the News Agency of Nigeria (NAN) on Sunday in Abuja while assessing the administration’s economic performance.
Oyerinde acknowledged that the removal of fuel subsidy and liberalisation of the foreign exchange market reflected government’s commitment to market-driven economic policies and improved transparency across sectors.
He said the reforms had enhanced fuel availability, reduced recurring supply disruptions and signalled policy consistency to both local and foreign investors.
According to him, while there are indications of improved investor confidence, many domestic businesses, particularly Micro, Small and Medium Enterprises (MSMEs), continue to contend with operational challenges.
He said depreciation of the naira had increased production costs, affected competitiveness and heightened operational risks for many businesses.
“Many private sector operators are yet to experience the anticipated gains of the reforms as they continue to grapple with inflation, energy costs and exchange rate volatility,” he said.
Oyerinde said declining consumer purchasing power and increasing production expenses had placed pressure on businesses, with some firms adjusting investment plans and operations in response to prevailing economic conditions.
On infrastructure and refining, Oyerinde said developments in housing, industrial investments and local petroleum refining had created opportunities and contributed to improved fuel supply.
He, however, identified power supply as a major challenge facing businesses, citing persistent grid instability and reliance on alternative energy sources.
“In spite of the ongoing reforms in the power sector, insufficient electricity supply remains the number one constraint to business productivity and competitiveness across the country,” he said.
Oyerinde said that although some macroeconomic indicators, including foreign reserves and government revenues, had shown improvement, the gains were yet to be broadly reflected in business operations and household welfare.
“Inflation, high energy costs, multiple taxation, logistics challenges and weak consumer spending continue to constrain productivity and limit business expansion,” he said.
The NECA director-general said employers remained cautious about large-scale recruitment amid high borrowing costs, foreign exchange volatility and rising operating expenses.
According to him, sustainable job creation will depend on deeper structural reforms that reduce the cost of doing business and improve access to affordable finance.
He urged government to prioritise stable power supply, lower energy costs, tax harmonisation, policy consistency and foreign exchange stability to accelerate economic recovery and strengthen investor confidence.
Oyerinde also called for increased investment in technical and vocational education, digital skills development and stronger public-private sector collaboration to enhance workforce readiness and enterprise growth.
He advocated support for local production through patronage of made-in-Nigeria goods, infrastructure development and improved security in key business and investment corridors.
Oyerinde expressed optimism that sustained reforms and targeted interventions would enable businesses to experience broader benefits capable of driving growth, employment and long-term economic development.
Banking, consumer stocks drive N4.5trn market gain in May
Meanwhile, the equities market sustained its positive momentum in May, with investors gaining N4.514 trillion as renewed buying interest in financial services and consumer goods stocks lifted overall market performance.
Market capitalisation rose by 2.89 per cent to close at N160.508 trillion in May, compared with N155.994 trillion recorded at the beginning of the month.
Similarly, the All-Share Index (ASI) advanced by 8,107.66 points, or 3.35 per cent, to settle at 250,385.47 from 242,277.81 at the close of April.
The performance, however, trailed the exceptional rally recorded in April when investors gained N26.185 trillion.
The market rally in May was largely driven by gains in financial services, consumer goods and selected industrial stocks.
Speaking with the News Agency of Nigeria (NAN) on Sunday in Lagos, Dr Bennett Eze, Head of Research and Development, Chartered Institute of Stockbrokers, said the performance was a reflection of a more cautious and selective investment environment.
According to Eze, the slower growth recorded in May was largely due to profit-taking by investors after the historic rally witnessed in April.
He explained that many investors moved to lock in gains, particularly in banking, industrial and consumer goods stocks, while the market also entered a consolidation phase as investors reassessed stock valuations.
“The slower pace of market growth in May could also be linked to rotation into fixed-income instruments, valuation concerns and global uncertainties.
“In spite of the equity market’s attractiveness, relatively high yields in the fixed-income market continue to compete for institutional funds, thereby moderating the intensity of equity inflows.
“Some fundamentally strong stocks had become significantly overbought after April’s surge, prompting investors to become more selective in deploying fresh capital.
“Also, lingering concerns about oil prices, geopolitical developments and global monetary policy direction encouraged a more cautious approach among foreign investors,” he said.
Eze noted that relative stability in the foreign exchange market and growing confidence in ongoing economic reforms further boosted investor sentiment.
He added that dividend-related positioning and corporate actions also supported demand for fundamentally strong companies.
Looking ahead, Eze expressed optimism about the market outlook for June and the second half of 2026, although he cautioned that volatility might increase.
He projected that the market would remain bullish in June, but with investors focusing more on earnings sustainability rather than momentum-driven buying.
He also anticipated periodic pullbacks following the strong gains recorded in the first five months of the year.
“Continued exchange-rate stability could attract additional foreign portfolio inflows.
“Moderating inflation and potential monetary easing later in the year may improve equity valuations.
“Banking sector recapitalisation is expected to strengthen confidence in financial stocks.
“Pension funds and institutional investors are likely to maintain significant exposure to equities given the long-term return prospects.
“However, key risks include inflationary pressures, oil price volatility, potential weakening of corporate earnings and political positioning ahead of the 2027 election cycle,” he said.
On sectoral outlook, Eze identified banking stocks as the market’s major attraction, citing stronger capital bases, robust earnings potential, digital banking expansion and improved investor confidence following recapitalisation efforts.
He also highlighted consumer goods, industrial goods, insurance, energy and telecommunications stocks as sectors likely to benefit from improving economic conditions, infrastructure spending, sector reforms and strong cash flow generation.
Meanwhile, the market recorded 18 trading sessions during the month, comprising 11 bullish sessions and seven bearish sessions.
Analysis of trading activities showed that investors traded 21.120 billion shares valued at N971.628 billion in 1,453,439 deals during the review period.
This represented an improvement compared with the 15.596 billion shares worth N848.972 billion exchanged in 1,113,650 transactions in April.
Among the major gainers, Guaranty Trust Holding Company rose from N135 to N137, while Ecobank Transnational Incorporated advanced from N80.60 to N97.40.
First Holdco appreciated from N64.65 to N70, while United Bank for Africa gained from N42.75 to N44.50.
Airtel Africa climbed from N3,021.30 to N3,655.70, Eterna increased from N32.80 to N34.45, while Learn Africa appreciated from N9.30 to N12.75.
Berger Paints also posted significant growth, rising from N81.75 to N147.60 during the month.
On the losers’ chart, Nigerian Aviation Handling Company declined from N258 to N189.50, while Guinness Nigeria fell from N497 to N402.60.
Access Holdings depreciated from N27 to N24.05, MTN Nigeria dropped from N915 to N820, while Aradel Holdings dipped from N2,024 to N1,933.80.
Meanwhile, the share prices of TotalEnergies Marketing Nigeria and Conoil remained unchanged at N640 and N194, respectively, throughout the month.
NAN reports that Nigeria will transition to a T+1 settlement cycle from Monday, June 1.
