Gloomy Business Climate Persists - CBN Report

The Central Bank of Nigeria Business Expectation Survey has identified insufficient power supply, high interest rate, unfavourable economic and political climate, financial problems, unclear economic laws, insufficient demand and access to credit as major factors constraining business activity in the current month.
Respondent firms, according to the report published by the CBN, March 5 expect the Naira to appreciate in the current and next months; inflation to rise in both next six months and the next twelve months; borrowing rates to rise in current month, next month and the next twelve months.

The February 2019 edition of the report was carried out during the period February 11-15, 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

On Business Outlook, respondents expressed optimism on the overall confidence index on the macro economy in February 2019. The businesses outlook for March 2019 showed greater confidence on the macro economy with 58.5 index points. The optimism on the macro economy in the current month was driven by the opinion of respondents from services (12.9 points), industrial (7.3 points), wholesale/retail trade (1.0 points) and construction sectors (0.8 points). Whereas the major drivers of the optimism for next month were services (33.4 points), industrial (17.7 points), wholesale/retail trade (5.3 points) and construction sectors (2.1 points).

The positive outlook by type of business in February 2019 were driven by businesses that are neither import nor export-oriented (14.3 points), import-oriented (4.0 points), both import- and export-oriented (3.2 points), and those that are export-related (0.6 points).


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All sectors except the construction sector, expressed optimism on own operations in February 2019. Respondents from the services sector expressed the greatest optimism on own operation with an index of 8.8 points, followed by the industrial sector with 3.4 points and then the wholesale and retail trade with 2.2 index points.

Financial Conditions and Access to Credit Respondents’ outlook on the volume of total order and business activity in February 2019 remained positive, as the index stood at 15.9 and 15.4 points, respectively. Similarly, respondents’ outlook on financial conditions (working capital) and average capacity utilization was optimistic, as the indices stood at 14.4 and 21.7 index points, respectively. Respondents remained positive on access to credit in the review month, with an index of 2.4 points.

On Employment and Expansion Plans, the positive outlook in the volume of business activities (64.4 index points) and employment (24.8 index points) indicated a favourable business outlook in the next month. The employment outlook index by sector showed that the services (26.1 points), indicates the highest prospects for creating jobs, followed by industrial sector (24.6 points), wholesale/retail trade sector (22.5 points) and construction sector (12.5 points). The analysis of businesses with expansion plans by sector in the next month showed that the services sector indicates higher disposition for expansion with an index of 27.1 points followed by wholesale/retail trade (10.0 points), both industrial and construction sectors.


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