Insufficient power supply, high-interest rate, unfavourable economic climate and financial problems are among major factors constraining business activity in Nigeria, according to businesses surveyed in the Central Bank of Nigeria’s Business Expectations Survey Report for March 2019.
The firms also identified unfavourable political climate, unclear economic laws, insufficient demand and access to credit as constraining factors.
According to the CBN report released Thursday, respondent firms expected the naira to appreciate in March, April and the next 12 months. They also expected the level of inflation to moderate in both next six months and the next 12 months, and the borrowing rates to rise in current month, next month and the next 12 months.
The Business Expectations Survey (BES) was carried out from March 11 to 15, 2019 with a sample size of 1,050 businesses nationwide. The respondent firms were made up of small, medium and large corporations covering both import- and export-oriented businesses.
CBN said a response rate of 96.2 percent was achieved, and the sample covered the services, industrial, wholesale/retail trade, and construction sectors.
The respondent firms expressed optimism on the macro economy, while their outlook on the volume of total order, business activity and financial conditions (working capital) were positive during the review period.
At 28.2 index points, respondent firms expressed optimism on the overall confidence index (CI) on the macro economy. The businesses’ outlook for April 2019 showed greater confidence in the macro economy with 64.8 index points.
The optimism on the macro economy in the month of March was driven by the opinion of respondents from services (16.8 points), industrial (8.6 points), wholesale/retail trade (2.3 points) and construction sectors (0.5 points), whereas the major drivers of the optimism for next month were services (37.0 points), industrial (19.4 points), wholesale/retail trade (6.2 points) and construction sectors (2.2 points).
The positive outlook by type of business was driven by businesses that are neither import- nor export-oriented (20.3 points), both import- and export-oriented (4.1 points), import-oriented (3.5 points), and those that are export-related (0.2 points).
All the four sectors expressed optimism on own operations in the review month. However, respondents from the services sector expressed the greatest optimism on own operation with an index of 7.1 points, followed by the industrial sector with 3.3 points, the wholesale and retail trade with 2.0 points and the construction sector with 0.5 points, respectively.
More respondent firms were satisfied with the management of inflation by the government with a net satisfaction index of 8.0 percent in March 2019. The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents.
Respondents’ outlook on the volume of total order and business activity in March 2019 remained positive, as the indices stood at 15.1 and 15.4 points, respectively. Similarly, respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilisation as the indices stood at 12.8 and 20.0 index points, respectively.
Iheanyi Nwachukwu
