The Central Bank has released its monthly Business Expectation Survey BES report for the month of March. The report shows insufficient power supply, high-interest rates, and unfavorable economic climate as major business constraints in the month under review.
The business outlook
At 24.5 index points, shows respondents’ overall confidence index (CI) on the macroeconomy in March 2018 improved when compared with the level of 14.5 index points recorded in February 2018.
The businesses outlook for April 2018 indicated greater confidence on the macroeconomy at 64.1 index points.
The positive outlook by type of business in March 2018 was driven by businesses that are both import-and export-oriented (29.1 points), those that are neither import-nor export-oriented (25.9 points), businesses that are export-related (23.5 points), and those that are import-oriented (17.7 points)
Financial condition and Access to credit
Respondents’ outlook on the volume of total order, business activity and financial conditions (working capital) stood at 16.0, 13.3, and 7.6 index points respectively, indicating an improvement in relation to its outlook in February 2018 which was 2.2, 7.1, and 3.8 respectively.
Respondents were however pessimistic on access to credit in the review month with an index of -12.2 points, which is a decline from the 7.2 point recorded in the preceding month.
Employment and expansion plans
The positive outlook in the volume of business activities (69.2 index points) and employment (27.9 index points) indicated a favorable outlook in the next month.
The employment outlook index by sector showed that the services sector (33.4 points) indicates the highest prospects for creating jobs, followed by wholesale/retail trade (22.9 points), industrial (21.5 points) and construction (16.2 points) sectors.
An analysis of businesses with expansion plans by sector in the next month showed that the services and construction sectors indicate greater disposition for expansion with indices of 34.8 and 14.3 points respectively.
The surveyed firms identified insufficient power supply (70.7 points), high interest rate (61.0 points), unfavourable economic climate (53.8 points), unclear economic laws (52.7 points), financial problems (50.5), insufficient demand (48.1 points), and unfavourable political climate (43.7 points) as the major factors constraining business activity in the current month.
The expectation on the exchange rate
Majority of the respondent firms expect the Naira to appreciate in the current and next months as the confidence indices stood at 26.7 and 40.8 points, respectively.
Expectations on inflations and borrowings
Respondent firms expect the inflation rate to fall in both the current and next months, with confidence indices of -13.4 and -15.8 points for the current and next months, respectively.
Similarly, respondent firms expect borrowing rates to rise in the current month but fall in the next month, as the confidence indices stood at 2.6 and -4.2 points, respectively.
The respondent firms were made up of small, medium and large organizations covering both import-and export-oriented businesses.