Omodele Adigun
As the business confidence on the economy for this month showed close to 200 percent jump when compared with the previous month, experts, have, however, cautioned that constraining factors may dampen the business outlook.
The Central Bank of Nigeria (CBN) had last week released its Business Expectations Survey Report for the month of August. It showed an increase in the respondents’ overall confidence index (CI) on the macro-economy to 21.5 index points, as against the 13.6 points in July, on the back of improvements in volume of total order, business activity, and financial conditions (working capital).
The businesses outlook for this September also indicated greater confidence in the macroeconomy at 61.6 index
points from the 58.7 points in previous month.
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Commenting on the report, analysts with Cordross Capital, an investment and stock brokerage house said high interest rate, insufficient power supply, among other factors, may dampen business outlook in the country.
In their weekly e-mail to investors , the financial experts stated:
“We opine that business confidence will maintain an upward trajectory due to the continued improvement in macroeconomic conditions. However, constraining factors cited — insufficient power supply, high interest rate, insufficient demand, and unfavourable political climate — remain downside risks to the outlook.”
According to the apex bank, at 61.6 index points, businesses’ confidence on the economy for September showed close to 200 per cent jump when compared with the previous month.
In the August 2018 Business Expectations Survey, CBN had stated that the overall confidence index (CI) on the macro economy in August 2018 was more optimistic when compared with the level of 13.6 index points recorded in July 2018. But the businesses outlook for September 2018 showed more confidence on the macro economy at 61.6 index points.
The August 2018 Business Expectations Survey (BES) was carried out between August 09-17, with a sample size of 1050 businesses nationwide drawn from the services, industry, wholesale/retail trade and construction sectors.
The respondent firms were made up of small, medium and large organisations covering both import and export oriented businesses.
The report explains that the optimism on the macro-economy in August was driven by the opinion of respondents from services (13.7 points), industrial (6.1 points), wholesale/retail trade (0.9 points), and construction (0.8 points), while the drivers of the optimism for September were services (36 points), industrial (19.2 points), wholesale/retail trade (4.2 points), construction (2.2 points) sectors.
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The positive outlook by type of business in August 2018 , according to CBN, were driven by businesses that are neither import-nor export-oriented (15.2 points),both import-and export-oriented (3.4 points) import-oriented (2.4 points), and those that are export-related (0.5 points).
On Business Confidence on Own Operations by Sector, the report says “Business- es expressed high optimism on own operations in August 2018 when compared to the previous month.
However, respondents from services and wholesale/retail trade sectors expressed relatively more optimism on own operations in the current month with indices of 8.1 and 1.4 respectively when compared with 2.7 and 0.3 reported in July 2018, respectively.”