The overall confidence of Nigerian businesses on macro economy has worsened as the index fell to 6.6 points in March from 26.6 in February 2020.
The Central Bank of Nigeria (CBN) on Wednesday, released the March 2020 Business Expectations Survey conducted from March 9-13, 2020 with a sample size of 1050 businesses nationwide.
A response rate of 92.8 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- and export-oriented businesses.
The worsening optimism on the macro economy in the month of March was driven by the opinion of respondents from manufacturing (3.3 points), agric/services (2.5 points), construction (0.7 point) and wholesale/retail trade sectors (0.1 point). However, the major drivers of the optimism for next month were agric/services (25.9 points), manufacturing (17.6 points), wholesale/retail trade (3.8 points) and construction (1.0 points) sectors.
Similarly, the order of sectoral optimism recorded in the next month remain unchanged for the next 2 and 6 months.
Further analysis showed that businesses that are neither import- nor export-oriented (3.9points), both import- and export-oriented (1.8 points), export-related (0.5 point), and those that are import-oriented (0.3 point) drove the positive business outlook in March 2020.
The business outlook for April, May and September 2020 showed greater confidence in the economy, with 48.3, 45.4, and 50.3 index points, respectively.
Respondents’ outlook on the volume of total order and business activity in March 2020 remained positive, at 11.5 and 45.4 points, respectively.
Similarly, the outlook on financial conditions (working capital) and average capacity utilization remained positive as the indices stood at 15.2 and 19.8 index points, respectively. Furthermore, the average capacity utilization for the manufacturing sector stood at 59.3 per cent.
Respondents were positive on their ability to access credit from the banks in the review month, as the index rose by 3.0 points to 4.6 points.
Respondent firms’ opinions on the volume of business activities (56.6 points) and employment (23.6 points) indicated a favourable business outlook for the next month.
The employment outlook index by sector showed that the construction sector had the highest prospect for employment in the next month, with an index of (30.0 points) followed by wholesale/retail trade (25.8 points), manufacturing sector (23.7 points) and agric/services sector (22.8 points).
Respondents were also optimistic about the volume of business activity and employment outlook index in the next 2 & 6 months.
However, Respondent firms identified insufficient power supply (65.6 points), competition (59.3 points), high interest rate (55.2 points), financial problems (55.0 points), unfavourable economic climate (54.6 points), unclear economic laws (49.8 points), unfavourable political climate (46.6 points), access to credit (44.6 points) and insufficient demand (41.5 points) as major factors constraining business activity in the current month.