The Central Bank of Nigeria, CBN, on Wednesday, released its Business Expectation Survey for July.
According to the report, the business outlook for August 2019 showed greater confidence on the macro economy.
The report published on the CBN website indicates that the July 2019 Business Expectations Survey, BES was conducted from July 08 – 12, with a sample size of 1, 050 businesses nationwide. A response rate of 97.4 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.
Respondents to the survey also expressed optimism on the overall confidence index on the macro economy in the month of July 2019.
The survey report shows that optimism on the macro economy in July was driven by the opinion of respondents from services, industrial, wholesale/retail trade and construction sectors whereas the major drivers of the optimism for August were services, industrial, wholesale/retail trade and construction sectors. The positive outlook by type of business in July 2019 were driven by businesses that are neither import- nor export-oriented, both import- and export-oriented, import-oriented, and those that are export-related.
The survey also focused on Business Constraints, pointing out that insufficient power supply is the major challenge facing businesses in the country. It also highlighted high interest rate, financial problems, unfavourable economic climate, unclear economic laws, insufficient demand and unfavourable political climate as well as access to credit and competition.
On what they expect from the current exchange rate regime, majority of the respondent firms expect the naira to appreciate in the current month, next month and next twelve months. The firms also expect borrowing rates to rise in the current month fall in the next month, and rise in the next twelve months. The respondents’ average expected inflation rate in the next six months and the next twelve months stood at 11.5 and 11.6 percent, respectively. But they anticipate better economic conditions as their index of economic growth rose in the short run with an index of 33.3, 48.7 and 60.6 points for the current month, next six months and next twelve months, respectively.
Also, the report indicates that “all sectors expressed optimism on own operations in the review month. Respondents from the services sector expressed the greatest optimism on own operation with an index of 8.3 points, followed by the industrial sector with 1.8 points, the wholesale/retail trade with 1.0 points and the construction sector with 0.1 points, respectively.”
On Financial Conditions and Access to Credit, respondents’ outlook on the volume of total order and business activity in July 2019 remained positive, as their indices stood at 11.8 and 13.0 points. Similarly, respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilization as the indices stood at 11.2 and 14.1 index points, respectively. Interestingly, respondents also expressed optimism on access to credit in the review month, with an index of 1.5 points.
Again, respondent firms’ opinions on the volume of business activities and employment indicated a favourable business outlook in August. “The employment outlook index by sector showed that the services sector indicates higher employment expansion plans in the next month, with an index of (27.0 points) followed by wholesale/retail trade (21.0 points), industrial sector (20.6 points) and construction sector (5.9 points),” the CBN also said.
The apex bank said analysis of businesses with expansion plans by sector in the August showed that the services sector indicates higher disposition to expansion with an index of (32.4 points) followed by construction services sector (17.6 points), industrial sector (5.4 points) and wholesale/retail trade sector.”
