The overall confidence on the macro economy by Nigerian businesses declined to 22.1 index point in February compared to 25.9 points in January this year, due to uncertainties surrounding the 2019 general elections.
The Central Bank of Nigeria (CBN) on Tuesday released its Business Expectations Survey (BES), which was carried out during the period February 11-15, 2019 with a sample size of 1050 businesses nationwide.
Also, the outlook of business firms on the macro economy for the next month declined to 58.5 in February from 62.1 points in January 2019.
“I think this can be largely attributed to the uncertainties around the general elections as investors adopted a “wait and see strategy””, Ayodeji Ebo, managing director Afrinvest Securities Limited said.
A response rate of 97.4 per cent was achieved, and the sample covered the services, industrial, wholesale/retail trade, and construction sectors.
According to the report, At 22.1 index points, respondents expressed optimism on the overall confidence index (CI) on the macro economy in February 2019. The businesses outlook for March 2019 showed greater confidence on the macro economy with 58.5 index points.
The optimism on the macro economy in the current month was driven by the opinion of respondents from services by (12.9 points), industrial (7.3 points), wholesale/retail trade (1.0 points) and construction sectors (0.8 points). Whereas the major drivers of the optimism for next month were services (33.4 points), industrial (17.7 points), wholesale/retail trade (5.3 points) and construction sectors (2.1 points).
“I feel the coast is clearer now with the conclusion of the Presidential election, hence we expect business confidence to improve in March albeit slightly”, Ebo added.
The positive outlook by type of business in February 2019 were driven by businesses that are neither import- nor export-oriented (14.3 points), import-oriented (4.0 points), both import- and export-oriented (3.2 points), and those that are export-related (0.6 points).
All sectors except the construction sector, expressed optimism on own operations in February 2019. Respondents from the services sector expressed the greatest optimism on own operation with an index of 8.8 points, followed by the industrial sector with 3.4 points and then the wholesale and retail trade with 2.2 index points.
Respondents’ outlook on the volume of total order and business activity in February 2019 remained positive, as the index stood at 15.9 and 15.4 points, respectively. Similarly, respondents’ outlook on financial conditions (working capital) and average capacity utilization was optimistic, as the indices stood at 14.4 and 21.7 index points, respectively.
However, the surveyed firms identified insufficient power supply (63.3 points), high interest rate (55.2 points), unfavourable economic climate (55.2 points), financial problems (53.0 points), unfavourable political climate (51.8 points), unclear economic laws (48.9 points), insufficient demand (42.4 points) and access to credit (41.4 points) as the major factors constraining business activity in the current month.
HOPE MOSES-ASHIKE
