CBN Business Survey Highlights Teething Economic Woes.
By CHUKWUMAH KELECHUKWU.
High-interest rate, unfavourable economic climate, financial problems and unclear economic laws are major factors that constrained businesses in May 2019, the latest Central Bank of Nigeria (CBN) Business Expectations Survey has shown.
These challenges notwithstanding, the report released early this month stated that businesses expressed confidence in the economy with most expecting the Naira to strengthen, inflation to moderate and borrowing rate to rise between now and next twelve months.
The survey conducted from May 6-10, 2019 with a sample size of 1, 050 businesses nationwide indicated that respondents from most sectors of the economy made up of small, medium and large corporations had confidence on the macro economy in the month of May 2019, and the business outlook for June 2019 showed greater confidence on the macro economy with 62.7 index points.
According to the report, the optimism on the macro economy in the current month was driven by the opinion of respondents from services (15.7 points), industrial (9.7 points), wholesale/retail trade (2.8 points) and construction (1.4 points) sectors.
For the month of June, the major drivers of the optimism were services (36.6 points), industrial (18.7 points), wholesale/retail trade (4.9 points) and construction (2.5 points) sectors.
In the current month, positive outlook by type of business was said to be driven by businesses that are neither import- nor export-oriented (20.8 points), both import- and export-oriented (5.3 points), import-oriented (3.0 points), and those that are export-related (0.7 points).
According to the report, all sectors expressed optimism on own operations in the review month with respondents from the services sector expressing the greatest optimism with 8.7 index points, followed by the industrial sector with 3.0 points, the wholesale/retail trade with 0.8 points and the construction sector with 0.1 points, respectively.
The report further stated that respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilization as the indices stood at 12.5 and 16.8 index points, respectively.
However, respondents expressed pessimism on access to credit in the review month, with an index of -1.9 points.
Employment and Expansion Plans Respondent firms’ opinions on the volume of business activities (68.6 points) and employment (24.8 points) indicated a favourable business outlook in next month.
On employment outlook index by sector, the wholesale/retail trade sector indicated higher employment expansion plans with an index of (25.9 points) followed by services sector (25.7 points), industrial sector (24.9 points) and construction sector (5.9 points).
Commenting on the report a member of the Manufacturers Association of Nigeria (MAN) who did not want his name on print told InsideBusiness that business constraining factors such as insufficient power supply, high interest rate, unfavourable economic climate, financial problems and unclear economic laws have always featured in the monthly report with little or no prospects of being addressed by the authorities, reducing the report to mere monthly ritual.
According to him, over the years, businesses have repeatedly complained about growth-stifling interest rate, inability to access credit as government competes with private sector at credit market space, endemic power failure, and lots more.
“With this CBN monthly survey, what has changed? Even the CBN set aside over N200billion funds for MSMEs and the funds are still lying dormant because most us could not meet the high conditions. We have since given up on government and its agencies,” the manufacturer concluded.
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