Nigerian firms list obstacles to business activities, optimistic of positive macro economy – CBN Report

By Charles Abuede

• Expect naira to appreciate in next 2 to 6 months
• Inflation to rise negatively in next 6 to 12 months
• Interest rates to rise in next 2 and 6 months

Nigerian firms have expressed optimism over the macro economy of country for the remaining period of 2020 despite the difficult economic and business conditions which have hampered business activities in the face of the pandemic, according to a recent Business Expectation Survey published by the Central Bank of Nigeria (CBN).

The coronavirus pandemic had led to economic lockdown, social unrest, and rising inflation, all of which have found comfort in the economy over time.

The survey report shows firms identified insufficient power supply, financial problems, high-interest rate, competition, unfavourable economic climate, unclear economic laws, unfavourable political climate, insufficient demand, access to credit and lack of equipment as major factors constraining business activity.

The survey, which covered businesses in the agriculture, services, manufacturing and construction sectors, wholesale and retail trade, made up of 1050 small, medium and large corporations covering both import-oriented and export-oriented businesses nationwide, revealed that the firms also expect average inflation in the next 6 and 12 months to stand at 13.30 and 13.55 per cent respectively while the rates of interest for borrowing is anticipated to reach 15.8 percentage points in 6 months from the current 16.2 per cent.

On the other hand, there was an expression of anticipation in the economic conditions with the index on economic growth rate in the short run standing at 15.4 and 29.4 points respectively for the month of October and November. However, firms also expect the naira to appreciate in the month of November, in the next two months and the next six months.

Meanwhile, responses gathered from the survey on the volume of business activities indicated a favourable business outlook for November and December 2020.

Businesses also hope to employ labour during this period as the outlook for employment and expansion was positive. Further disclosure from the survey shows that the agric/services sector has the highest prospect for employment in November, followed by the manufacturing sector. Equally, businesses with expansion plans in November, the analysis showed that the construction sector has the highest disposition to expand.