By Business AM
Stanbic IBTC Bank, has faulted the cash shortages across the Nigerian economy for the negative impact on the private sector which resulted in business conditions deteriorating markedly, ending a 31-month sequence of expansion.
The bank, in its February Purchasing Managers Index (PMI) report, disclosed that the PMI data dropped below the 50.0 no-change mark to 44.7 per cent in February, from 53.5 in January, reflecting a decline in both micro and macro economic activities.
The PMI report, which measures the performance of the private sector from a survey of 400 companies from agriculture, manufacturing, services, construction and retail, showed that significant declines were seen in both output and new orders, while firms scaled back their purchasing activity and employment. It also pointed out that with new orders and output falling, companies were forced to reduce their input buying and staffing levels accordingly.
Stanbic IBTC further reported that the decline in operating conditions was the sharpest since the survey began in January 2014, excluding the opening wave of the COVID-19 pandemic in the second quarter of 2020.
According to the report, companies were also impacted by shortages of fuel, which added to price pressures and led to supplier delivery delays.
“The most severe impacts of cash shortages were seen with regards to output and new orders, which both fell substantially as customers were often unable to secure the funds to commit to spending.
The decline in new orders was the first since June 2020, while the fall in output ended a seven-month sequence of growth. In both cases, the reductions were the most pronounced in the survey’s history, apart from during the opening wave of the COVID-19pandemic,” the report showed.
The PMI report also noted that the decrease in purchasing reflected not only a drop in customer demand but also difficulties for companies to find the funds to pay for items. Alongside cash shortages, the private sector was also impacted by scarcity of fuel in February.
This, Stanbic IBTC said, had a notable impact on suppliers ‘delivery times, which lengthened for the first time in close to six-and-a-half years and to the greatest extent since April 2016.
