As political activities continue to build up ahead of the 2019 elections, business operators in the country are optimistic on the Nigerian economy, expecting the naira to firm up in coming months.
The Monthly Business Expectations Survey of the Central Bank of Nigeria, showed that respondent firms expressed more optimism on the macro-economy in August 2018 when compared with the level recorded in the preceding month.
Operators in the Nigerian business community said they expect the naira to appreciate in the current and next months; inflation rate to fall in both months; and borrowing rates to rise in the current month and fall in the next month.
At 21.5 index points, respondents’ overall confidence index (CI) on the macro economy in August 2018 was more optimistic when compared with the level of 13.6 index points recorded in July 2018. The businesses outlook for September 2018 showed more confidence on the macro economy at 61.6 index points.
The optimism on the macro economy in the current month was driven by the opinion of respondents from services, industrial, wholesale/retail trade, and construction sectors, while the drivers of the optimism for next month were services, industrial, wholesale/retail trade, construction sectors.
The positive outlook by type of business in August 2018 were driven by businesses that are neither import nor export oriented, both import and export oriented, import-oriented, and those that are export-related. Also, business confidence on own operations by sector businesses expressed high optimism on own operations in August 2018 when compared to the previous month.
However, respondents from services and wholesale/retail trade sectors expressed relatively more optimism on own operations in the current month with indices of 8.1 and 1.4 respectively when compared with 2.7 and 0.3 reported in July 2018, respectively.
Firms identified insufficient power supply, high interest rate, financial problems, unfavourable economic climate, unclear economic laws, insufficient demand, unfavourable political climate and access to credit as the major factors constraining business activity in the current month.