A survey conducted by the Central Bank of Nigeria (CBN) has reflected improved private sector player’s confidence in the nation’s economy, even as they expected cost of funds to reduce to enable them optimize their operations.
Specifically, the apex bank reported that the confidence of the Organised Private Sector (OPS)Operators, on the economy rose to 61.6 index points in September 2018.
The CBN report which was released on Wednesday also showed that OPS expected that inflation rate to decelerate and the Naira to appreciate in the months ahead.
The survey titled ‘Business Expectation Survey (BES) report, August 2018’ stated: “The businesses outlook for September 2018 showed more confidence on the macro economy at 61.6 index points.
“Majority of the respondent firms expect the Naira to appreciate in the current and next month as the confidence indices stood at 27.9 and 43.9 points, respectively. Respondent firms expect inflation rate to fall in both the current and next months, with confidence indices of -8.8 and -16.6 points for the current and next months, respectively.
“However, respondent firms expect borrowing rates to rise in August but decline in September 2018, as the confidence indices stood at 2.6 and -0.6 points, respectively”, the survey added.
In addition, the survey findings showed that “at 21.5 index points, respondents’ overall confidence index (CI) on the macro economy in August 2018 improved when compared with the level of 13.6 index points recorded in July 2018.
In addition, it also stated that the positive outlook by type of business in August 2018 were driven by businesses that were neither import-nor export-oriented (15.2 points), with both import-and export-oriented standing at 3.4 points, import-oriented at 2.4 points, and those that are export-related, 0.5 points.
The report clarified further: “Respondents’ outlook on the volume of total order and business activity in August 2018 remained positive, as the index stood at 10.0 and 9.1 points, respectively when compared to 4.6 and 3.5 points, respectively recorded in the previous month.
“Similarly, respondents’ outlook on financial conditions (working capital) and average capacity utilization improved, as the indices stood at 8.4 and 15.9 index points, respectively when compared with the 2.2 and 10.0 points, respectively recorded in July 2018.
“Respondents were pessimistic on access to credit in the review month, with an index of -1.0 points.
“The employment outlook index by sector showed that the services sector (27.5 points) indicates the highest prospects for creating jobs, followed by industrial (22.0 points), wholesale/retail trade (20.5 points), and construction (11.4 points), sectors”, the survey indicated.
The apex bank also reported that the surveyed entities identified insufficient power supply (66.0 points), high interest rate (57.0 points), financial problems (54.9 points), unfavourable economic climate (54.8 points), unclear economic laws (48.1 points), insufficient demand (47.3 points), unfavourable political climate (46.0 points) and access to credit (42.2 points) as the major factors constraining business activity in the current month.
The survey covered the opinion of respondents from services (13.7 points), industrial (6.1 points), wholesale/retail trade (0.9 points), and construction (0.8 points), sectors, while the drivers of the optimism for next month were services (36.0 points), industrial (19.2 points), wholesale/retail trade (4.2 points) and construction (2.2 points) sectors.