Ahead of the general elections starting in five days, Nigerian businesses from the services, manufacturing, wholesale/retail trade, to construction sectors, are less confident on the country’s macro-economic performance in February compared to January.
With political uncertainty in the country’s business environment, figures compiled from the Central Bank of Nigeria’s business expectation survey on Thursday revealed that businesses outlook for February 2019 declined marginally by 7.59 percent from 67.2 index points for January to 62.1 index points for February.
Johnson Chukwu, the MD of Cowry Asset, said the decline was largely based on the fact that February is an election month. “Minimal economic activities will take place in February. As you can largely see, a lot of businesses are holding their orders pending the conclusion of the election,” Chukwu told BusinessDay.
The major drivers of the optimism for February were services (35.0 points), industrial (20.0 points), wholesale/retail trade (5.4 points) and construction sectors (1.7 points).
For January, the drivers of the optimism were services (36.8 points), industrial (21.4 points), wholesale/retail trade (6.0 points), construction sectors (2.9 points).
A breakdown of the CBN Monthly Business Expectation Survey Report for January 2019 revealed that firms identified insufficient power supply, high interest rate, unfavourable economic climate, unclear economic laws, financial problems, insufficient demand and unfavourable political climate as major factors constraining business activity in the current month.
This was affirmed by Henry Ogbuaku, head, Asset Management at Growth & Develop. Asset Management Limited, who blames this on the fact that election is around the corner, “considering the kind of system that we operate here, where the election is about the winner takes all, it becomes a do or die affair.”
Consequently, “the people become sceptical about the outcome” as some worry that if the election is not properly managed, “there could be crisis and all of that have a way of eating into the economy.”
Respondent firms expected the naira to appreciate last month as well as for this month. They also expect inflation to decline in both next six months and the next twelve months. But they expect borrowing rates to rise in January February this year, and the next 12 months.
The rate of increase in the prices of goods and services increased to 11.44 percent (year-on-year) in December 2018 from 11.28 percent recorded in November 2018.
Rafiq Raji, the chief economist at Macroafricaintel, said, “Regardless of the survey results, I think businesses would be holding their breaths until the elections are over.”
Meanwhile, with the 2019 presidential election barely five days away, reports from local and international research firms tracked by BusinessDay indicate that rising unemployment, poverty and insecurity in Nigeria are major concerns for voters.
Buhari, Nigeria’s president who holds the record of the first leader to unseat an incumbent president, and candidate of the ruling All Progressives Congress (APC), is seeking re-election for another term of four years in the presidential elections.
His main challenger out of the other 78 presidential candidates is the former vice president, Atiku Abubakar of the People’s Democratic Party (PDP), who has promised in his manifesto to turn around the country’s economy.
Meanwhile, figures by the National Bureau of Statistics (NBS) show that Nigeria’s Gross Domestic Product (GDP) year-on-year growth rate stood at 1.81 percent in Q3 2018 as against its 1.50 percent reported for the previous quarter.
The quarterly growth was fuelled by the non-oil sector growth and contribution at 90.62 percent and 98.62 percent respectively.
The GDP growth reported for the third quarter of 2018 represents the sixth consecutive fragile growth reported for Africa’s largest economy since it exited a five-quarter contraction in Q2 2017.
Nigeria’s unemployment rate has soared since 2015, rising from 8.2 percent to 23.1 percent in the third quarter of 2018, according to the figures from the nations’ statistical agency.
Another 20 percent of the working-age population is underemployed, according to the NBS. For young people aged 15 to 35, who make up more than half of registered voters, the figures are even worse: 55.4 percent are unemployed or underemployed
