Firms’ confidence in economy high at 64.7 index points for September

The Nigerian businesses showed greater confidence in the macro economy with 64.7 index points for September 2019 according to the Central Bank of Nigeria (CBN)’s Business Expectations Survey (BES) report released on Tuesday.

According to the CBN, the BES conducted from August 12-21, 2019 with a sample size of 1050 businesses nationwide. A response rate of 95.4 per cent was achieved, and the sample covered the services, industrial, 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.

At 28.6 index points, respondents expressed optimism on the overall confidence index (CI) on the macro economy in the month of August 2019 compared to 28.1 points in July, 2019.

The optimism on the macro economy in the current month was driven by the opinion of respondents from services (15.4 points), industrial (10.1 points), wholesale/retail trade (2.4 points) and construction (0.7 points) sectors. For next month, the major drivers of the optimism were services (36.1points), industrial (20.7 points), wholesale/retail trade (6.0 points) and construction (1.9 points) sectors.

The services sector is made up of financial intermediation, hotels, and restaurants, renting and business activities and community and social.

The report noted that the positive outlook by type of business in August 2019 was driven by businesses that are neither import- nor export-oriented (21.0 points), both import- and export-oriented (4.3 points), import-oriented (2.9 points), and those that are export-related (0.3 points).

The analysis of businesses with expansion plans by sector in the next month showed that the construction services sector indicates higher disposition to expansion with an index of (46.7 points), followed by services sector (30.3 points), industrial sector (17.6 points) while respondents in the wholesale/retail trade sector indicated no plans to expand their businesses (-1.8 points).

However, respondent firms identified insufficient power supply (65.9 points), high interest rate (56.5 points), financial problems (53.7 points), unfavourable economic climate (53.5 points), unclear economic laws (50.8 points), unfavourable political climate (47.0 points), insufficient demand (46.0 points), access to credit (45.6 points) and competition (43.0 points), respectively, as major factors constraining business activity in the current month.

Respondents anticipate better economic conditions as their index of economic growth rose in the short run with an index of 35.4, 47.9 and 58.5 points for the current month, next six months and next twelve months, respectively.