The latest Central Bank of Nigeria’s (CBN) monthly Business Expectations Survey (BES) report has shown that majority of businesses in the country expect the naira to appreciate in the coming months. According to the BES report, which was posted on the apex bank’s website yesterday, majority of respondent firms also expect inflation to moderate in both the next six months and the next 12 months. The report, which showed that, “respondent firms expressed optimism on the macro economy in June 2019,” also indicated that majority of the businesses expect borrowing rates to rise this month and the next 12 months. Specifically, the report said: “At 27.3 index points, respondents expressed optimism on the overall Confidence Index (CI) on the macro economy in the month of June 2019.
The business outlook for July 2019 showed greater confidence on the macro economy with 63.2 index points. The optimism on the macro economy in the current month was driven by the opinion of respondents from services (14.9 points), industrial (9.8 points), wholesale/retail trade (2.0 points) and construction (0.7 points) sectors. Whereas the major drivers of the optimism for next month were services (36.0 points), industrial (20.5 points), wholesale/retail trade (5.1 points) and construction (1.6 points) sectors”.
Besides, it stated that the positive outlook by type of business in June 2019 was driven by businesses that are neither import- nor export-oriented (19.3points), both import- and export-oriented (4.3 points), import-oriented (3.5 points), and those that are export-related. On financial conditions and access to credit, the study indicated that respondent firms’ outlook on the volume of total order and business activity in June 2019 “ remained positive, as their indices stood at 13.8 and 14.9 points. Similarly, respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilization, as the indices stood at 12.8 and 18.8 index points, respectively.
Respondents expressed optimism on access to credit in the review month, with an index of 2.3 points.” Equally, on employment and expansion plans, the report showed that respondent firms’ opinions on the volume of business activities (64.7 points) and employment (24.9 points) indicated a favourable business outlook in next month. “The employment outlook index by sector showed that the services sector indicates higher employment expansion plans in the next month, with an index of (27.3 points) followed by wholesale/retail trade (26.4 points), industrial sector (21.8 points) and construction sector (9.4 points),” the report stated.
However, according to the report, respondent firms identified insufficient power supply, high interest rate, unfavourable economic climate, financial problems and unclear economic laws as major factors that hindered business activity in June 2019.