Nigerian businesses overall confidence on macroeconomy at -7.9 index points was bearish in July 2020 according to the Business Expectations Survey (BES) report released by the Central Bank of Nigeria (CBN) on Wednesday.
In addition to the impact Covid-19 pandemic lockdown, firms identified insufficient power supply, competition, unfavourable economic climate, financial problems, high interest rate, unclear economic laws, unfavourable political climate, insufficient demand, access to credit and lack of equipment as major factors constraining business activity.
The Survey was conducted by the CBN from July 13-17, 2020 with a sample size of 1050 businesses nationwide. A response rate of 95.9 per cent was achieved, and the sample covered the agric/services, manufacturing, wholesale/retail trade, and construction sectors.
The respondent firms were made up of small, medium and large corporations covering both import�oriented and export-oriented businesses.
The pessimism on the macro economy in July was driven by the opinion of respondents from agric/services (-4.8 points), manufacturing (-2.9 points) and the construction sector (-0.5 point).
Further analysis showed that businesses that are neither import nor export-oriented (-5.6 points), import-oriented (-1.8 point), export-oriented (-0.4 point), and both import- export-oriented (-0.2 point) drove the negative business outlook in July 2020.
However, the respondent firms expressed optimism in the overall business outlook in September, 2020 and January 2021 as shown in a greater confidence of the economy, at 45.5 and 62.4 index points, respectively.
The major drivers of optimism for next month were agric/services (20.1 points), manufacturing (10.0 points), wholesale/Retail (2.4 points) and construction (1.2 point).
Respondents’ outlook on access to credit, financial conditions (working capital) and the volume of total order remained negative, at -8.1, -4.1, and -0.1, index points, respectively while their outlook on average capacity utilization was positive at 4.0 points. Respondents were however optimistic on the volume of business activity in July 2020 as the index stood at 45.5 points.
Respondent firms’ opinions on the volume of business activities (47.0 points) indicated a favourable business outlook for August 2020 they also hope to employ in the next month as the outlook was positive at 12.3 points. Respondents were also optimistic about the volume of business activity and employment outlook index in the next 2 & 6 months as all indexes were positive.
The break down by sector showed that wholesale/retail trade had the highest prospect for employment in the next month, with an index of (16.4 points) followed by manufacturing sector (14.6 points), and agric/services sector (3.1 points).
The analysis of businesses with expansion plans in Augustshowed that the wholesale/retail trade sector indicates the highest disposition to expand with an index 46.3 points, construction sector had an index of 45.0 points, agric/services sector had an index of 43.4 and manufacturing sector had 39.7 points.
