Nigeria business confidence index falls 5%

The 2014 Nigeria third quarter (Q3) aggregate business confidence index (BCI) has dropped to 14.3 percent, from 19.4 percent reported in the second quarter (Q2).

This represents 5.1 percent point slack of the confidence level among business operators over the last three months, research report by the Lagos Chamber of Commerce and Industry (LCCI), led by Vincent Nwani, has shown.

The index had fluctuated over the last two quarters as it was 10.5 percent in the first quarter (Q1) and 19.4 percent in Q2. BCI is a leading economic indicator designed to measure the degree of optimism on the state of the economy. The third quarter survey covered 202 top business executives in 183 companies between June 20 and July 10, 2014.

“The key factors that mostly depressed the confidence level of business leaders at this time are security challenges across the country; political transition/electioneering activities and associated risks; cargo clearing issues and access to and from the nation’s foremost ports – Apapa and Tin Can; policy uncertainties and regulatory concerns; and worsening public power supply,’’ the research report said.

BCI for hotels and restaurants rose to 21 percent, from 19 percent reported in Q2.

The telecoms/postal sector posted 21 percent BCI, five points higher than 16 percent of Q2. But BCI for oil and gas fell five points to 9 percent, from 14 percent posted in Q2. Manufacturing’s BCI remained stable at 4 percent, while agriculture’s reported a dismal 8 percent, from 24 percent posted in Q2.

BCI for distributive trade rose to 20 percent, from 12 percent reported in Q2. Furthermore, BCI for professional services fell to 13 percent, from 15 percent of Q2.

On the other hand, finance and insurance’s rose to 32 percent, from 26 percent of Q2.

“The optimism among players in the agricultural sector which was relatively strong in 1st and 2nd quarter is beginning to moderate,’’ the report said.

“This is a pointer that operators expectation in the agricultural sector is beginning to wane. The BCI Q3-2014 survey confirmed an increasing level of uncertainty among the private sector players due to rising electioneering activities and the build up to the 2015 general elections,’’ it said.

BusinessDay gathered that the impressive report of finance and insurance for the period ended June 30, 2014, and the recovery of the nationalised banks contributed significantly to the sustenance of optimism among the financial sector operators.

“Notwithstanding, how much the ongoing regulatory induced recapitalisation of the Bureau De Change (BDC) and finance companies will impact the finance sector will be seen over the subsequent quarters,’’ said the research.

ODINAKA ANUDU