Nigerian firms expect to start employing again in August – CBN survey

After a trying five months of the Coronavirus pandemic and the consequent challenges for the economy, business enterprises in Nigeria expect to start employing again in the month of August 2020.

This is according to the CBN Business Expectation Survey which was published recently on the CBN website.

Findings from the survey show a generally optimistic outlook for August with a confidence index of 33.7 points, and hopes that the volume of business activities would increase in the next 2 to 6 months to justify the employment outlook.

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The business survey was conducted by the statistics department of the Central Bank of Nigeria in July 2020, and it involved a sample of 1050 businesses with a 96% response rate. Respondent firms include small, medium and large businesses cut across agriculture, services, manufacturing, wholesale/retail trade, and construction sectors, both import and export-oriented, across the country.

Sector by sector breakdown showed that wholesale/retail trade had the highest prospect for employment in August with an index of 16.4 points, while manufacturing trailed closely behind with 14.6 points. Respondent firms in Agric/services put the employment prospect index at 3.1 points.

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The wholesale/retail trade sector is also highly optimistic on expansion plans, showing an index of 46.3 points, while the construction sector had an index of 45.0 points. Agric/services sector had an index of 43.4 and manufacturing sector had 39.7 points all pointing towards a positive disposition to expand in the current month (August).

With such expansion plans in view, borrowing rate is also expected to increase in August, September, and December 2020 with confidence indices of 10.5, 15.7 and 16.1 points respectively.

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This is in spite of the obvious challenges which the firms face, which include insufficient power supply, competition, unfavourable economic climate, financial problems, and high-interest rates.

Unclear economic laws, unfavourable political climate, insufficient demand, difficulties in accessing credit and equipment also pose major constraints to business activities.

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More on the outlooks

On the exchange rate, firms are positive that the Naira will appreciate in August, September, and December, with 3.0, 16.5 and 49.4 confidence index points respectively. Meanwhile, inflation level is expected to rise in the next 6 to 12 months (December 2020 and June 2021), at 13.92 and 13.95 percent.

There is an anticipated increase in economic conditions in August at 22.8 points, much higher than the 9.5 points in July. The firms also expect things to improve more in September and December with confidence of 31.7 and 51.4 points.