2013: Optimism dominates Nigeria’s business community

Two different surveys by BusinessDay Research show that the Nigerian business community is highly optimistic about 2013. The first survey, done in partnership with TNS, shows that 76 percent of the business owners believe that there will be an improvement in the volume of production or sales in 2013. Also, 48 percent of business owners expect to engage new employees in 2013, with 36 percent expecting that the number of employees will remain the same, and only 17 percent expecting that there will be a decline in the number of people employed.

It is even more interesting that 82 percent of business owners that participated in the survey expect to see an improvement in the state of their businesses in the next six months, though 16 percent expect that their business condition will remain the same. However, only 48 percent of the business owners said the current state of their business is satisfactory, while another 41 percent said the current situation of their business is just good. Eleven percent of the business owners surveyed, on the other hand, considered the current state of their business as being bad.

On what business owners consider as critical challenges to the success of their businesses, poor demand for goods and services was picked by 59 percent of respondents as being the biggest challenge. Cost of raw materials was considered as the next biggest challenge faced by business owners, with 42 percent of respondents identifying that as a challenge, while only 26 percent of respondents picked cost of labour as a challenge to doing business.

Interestingly, power supply, cost of finance and multiple taxes ranked low on the survey as challenges faced by business owners. Obviously, business owners consider these challenges as surmountable as long as they stay in business.

A second survey carried out by BusinessDay Research, targeted specifically at CEOs in January and February 2013, largely turned out similar results as the initial survey with TNS, showing that CEOs are highly optimistic of improved business conditions in 2013. The BusinessDay Research survey shows that 96.43 percent of responding CEOs expressed optimism that the volume of business that they will do in 2013 will increase; only 3.57 percent expected that the volume of business they are doing will remain unchanged, while no CEO expected a downturn in the volume of business done.

Also, 68 percent of responding CEOs stated that they expect that the number of people employed by their organisations will increase in 2013, with only 25 percent of CEOs stating that it will remain unchanged, and another 7.14 percent stating that the number will decrease.

CEOs were almost evenly divided on the current state of their businesses. While 32.14 percent of responding CEOs described the current state of their businesses as good, another 39.29 percent described theirs as satisfactory. There was, however, a higher percentage of CEOs, 28.57 percent, describing the current state of their businesses as bad, unlike the initial survey where only 11 percent said business was bad. A significant 89.29 percent of CEOs, however, expressed the confidence that their current business situation will improve in 2013, with just 10.71 percent expecting it to remain the same.

When CEOs were asked to identify which of the business limitation that they face currently will improve most in 2013, they picked power supply, with 39.93 percent of respondents expecting to see improvement in power supply in 2013. CEOs are obviously expecting the current power reforms to have a positive impact on their businesses in the year.

CEOs also identified increased demand for services and products as the next most likely business limitation that will improve in 2013, while 10.93 percent of responding CEOs also expressed optimism that there will be a reduction in the cost of finance in 2013.

As the BusinessDay/TNS Business Confidence survey also found out, CEOs identified low demand for goods and services as a critical challenge. Inconsistent government regulations, cost of multiple taxes, cost of finance or interest rates, and unfavourable government regulations were also identified as key limitations facing their businesses.

The BusinessDay Research CEO survey was carried out over a period of six weeks from early January to mid-February 2013. Respondents were heavily skewed in favour of the service industry, with 75 percent of respondents coming from that sector, 10.71 percent of respondents from the oil and gas sector of the Nigerian economy, and 7.14 percent from the manufacturing sector. A complete report on the CEO survey will be included in BusinessDay Research forthcoming report on the top 25 CEOs that made the most return for shareholders in 2012. The report is due for release in March.

Anthony Osae-Brown

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The 2013 Nigerian banking outlook is now available for free download on the BusinessDay website