Insufficient power supply, high interest rate, others constrain business activity – CBN survey

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Stories by Kayode Tokede

A Central Bank of Nigeria (CBN) monthly Business Expectations Survey Report for September has revealed that insufficient power supply, high interest rate, unfavourable economic climate, among other factors constrained business activity for the month of September.

The report which was released during the weekend said majority of the respondent firms expect the naira to appreciate in the current and next months as the confidence indices stood at 29.9 and 41.5 points, respectively

According to the report, “The surveyed firms identified insufficient power supply (65.9 points), high interest rate (54.9 points), unfavourable economic climate (53.6 points), financial problems (51.6 points), unclear economic laws (47.1 points), unfavourable political climate (46.9 points), insufficient demand (44.5 points) and access to credit (40.4 points) as the major factors constraining business activity in the current month.”

Respondent firms to CBN survey said they expected inflation rate to fall in both the current and next months, with confidence indices of -4.7 and -13.9 points for the current and next months, respectively.

“Similarly, respondent firms expect borrowing rates to rise in both current month and next month as the confidence indices stood at 3.7 and 1.8 points, respectively.”

On business outlook, respondents’ outlook improved as against the prior month report by CBN.

The survey stated that, “At 24.8 index points, respondents’ overall confidence index (CI) on the macro economy in September 2018 was more optimistic when compared with the level of 21.5 index points recorded in August 2018.

“The businesses outlook for October 2018 showed more confidence on the macro economy at 64.5 index points.

“The optimism on the macro economy in the current month was driven by the opinion of respondents from services (16.2 points), industrial (6.0 points), wholesale/retail trade (1.9 points) and construction sectors (0.6 points), whereas the drivers of the optimism for next month were services (38.3 points), industrial (18.8 points), wholesale/retail trade (4.9 points) and construction (2.5 points) sectors .

“The positive outlook by type of business in September 2018 were driven by businesses that are neither import- nor export-oriented (17.8 points), both import- and export-oriented (3.6 points) import-oriented (2.8 points), and those that are export-related (0.6 points).”

Businesses owner had expressed optimism on own operations in September 2018 when compared to the previous month.

“Respondents from services and industrial sectors expressed relatively more optimism on own operations in the current month with indices of 9.6 and 2.1 points, respectively when compared with 8.1 and -1.1 points reported in August 2018, respectively,” the survey by CBN explained.

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