By Charles Ike-Okoh
THUR, 05 NOV, 2020-theGBJournal- ‘’Respondents are optimistic in their outlook for November with a Confidence Index of 37.9,’’ says the Central Bank of Nigeria (CBN) in their October 2020 Business Expectations Survey Report published Monday.
The survey covered respondent firms’ opinions on the volume of business, outlook on volume of total order, volume of business activity, average capacity utilization among others.
The apex Bank said that they also expressed optimism in the overall business outlook for December 2020 and April 2021 as shown in a greater confidence of the economy at 46.1 and 59.7 index points, respectively.
The Business Expectations Survey was conducted online from October 12-16, 2020 with a sample size of 1050 businesses nationwide with a response rate of 89.4 per cent.
The November Index contrasts the pessimism shared in October when the overall confidence index (CI) on the macro economy was at 1.5 index points, underlining the pessimism on the macro economy driven by the opinion of respondents from agric./services (-3.1 points), construction (-0.7 points) and wholesale/retail trade sectors (-0.5 points).
According to the survey, the major drivers of optimism for next month are agric./services (20.0 points) and manufacturing sectors (13.4 points).
Respondents from the construction and wholesale/retail trade sectors expressed pessimistic opinions on own operations in the review month with outlooks of -0.3 and -0.4, respectively, while those from manufacturing and agric./services sectors expressed positive confidence of 1.3 and 1.8 index points, respectively.
Respondents’ outlook on volume of total order, volume of business activity, average capacity utilization and financial condition (working capital) were positive at 7.9, 46.1, 11.2 and 2.3 index points, respectively. However, their outlook on access to credit was negative at -2.1 index points in October 2020.
Respondent firms’ opinions on the volume of business activities indicated a favourable business outlook for November and December 2020 with indices of 56.2 and 62.7 respectively. Businesses also hope to employ in November and December as the outlook was positive at 19.5 and 22.5 index points, respectively.
The break down by sector showed that the agric/services sector with (20.8 points) has the highest prospect for employment in the next month, followed by manufacturing sector with an index of (20.5 points), construction (11.4 points) and wholesale/retail trade (10.5 points).
Respondents were also optimistic about the volume of business activity and employment outlook index in the next 6 months as all indexes were positive.
An analysis of businesses with expansion plans in November showed that the Construction sector has the highest disposition to expand with an index of 64.7 points. Agric/services sector had an index of 49.8 points, wholesale/retail trade sector had 46.8 index points and manufacturing sector had 42.0 index points.
There were also questions around the impact of power on businesses (electricity), financial problems, interest rate, political climate and exchange rate.
According to the survey, respondent firms identified insufficient power supply (70.8 points), financial problems (64.0 points), high interest rate (63.4 points), competition (63.3 points), unfavourable economic climate (63.0 points), unclear economic laws (58.7 points), unfavourable political climate (56.5 points), insufficient demand (52.0 points), access to credit (41.4 points) and lack of equipment (40.1 points) as major factors constraining business activity in the current month.
Respondent firms expect the naira to depreciate in the current month, but appreciate in the next month, next 2 months and next 6 months, as their confidence indices stood at -6.6, 8.4, 18.3 and 35.0 index points, respectively. Respondent firms expect borrowing rates to rise in the current month, next month, next 2 months and the next 6 months with indices of 16.2, 13.5, 16.2 and 15.8 points, respectively.
Firms expect the average inflation rate in the next six months and the next twelve months to stand at 13.30 and 13.55 percent, respectively.
On Economic growth rate, respondents anticipate increase in economic conditions as the index on economic growth rate in the short run stood at 15.4 and 29.4 points for the current month and next month, respectively. They also anticipate increase in economic conditions for the next 2 months and next 6 months as their index stood at 38.0 and 50.5 points, respectively.
Respondent firms expressed dissatisfaction with the management of inflation by the Government, with a negative net satisfaction index of -24.2 in October 2020. The net satisfaction index is the proportion of satisfied less the proportion of dissatisfied respondents.
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