High interest rates, unfavourable economic climate and insufficient power supply have been identified as the major constraints to businesses in the country.
The Statistics Department of the Central Bank of Nigeria said these in its ‘January 2020 business expectations survey report’.
Part of the report read, “Respondent firms identified insufficient power supply (66.2 points), high interest rates (57.1 points), unfavourable economic climate (54.6 points), and financial problems (52.8 points).
“Others are unclear economic laws (51.9 points), unfavourable political climate (46.3 points), competition (45.3 points) and insufficient demand (44.2 points) as major factors constraining business activity in the current month.”
It stated that respondent firms expected borrowing rates to rise in 2020 as the confidence indices stood at 6.0, 3.8 and 4.8 points respectively.
Respondent firms, it added, expected the naira to appreciate as their confidence indices stood at 26.2, 39.3 and 48.6 index points respectively.
It said further, “Respondents anticipated improvements in economic conditions as the index on economic growth rate in the short run stood at 34.5, 45.1 and 55.6 points for the current month, next six months and next twelve months respectively.”
According to the report, respondent firms expressed satisfaction with the management of inflation by the government, with a positive net satisfaction index of 3.1 in January 2020.
The net satisfaction index was the proportion of satisfied less the proportion of dissatisfied respondents, it added.
On employment and expansion plans, the CBN stated that respondent firms’ opinions on the volume of business activities (65.8 points) and employment (30.1 points) indicated a favourable business outlook for next month.
It stated that the employment outlook index by sector showed that the industrial sector had the highest prospect for employment in next month, with an index of (30.9 points) followed closely by services sector (30.3 points), wholesale/retail trade sector (27.5 points) and construction sector (27.3 points).
The analysis of businesses with expansion plans in February showed that the services sector indicated the highest disposition to expand with an index of 29.1 points.
It added that the wholesale/retail trade sector had an index of 23.6 points, the construction sector had 22.2 points, and the industrial sector had an index of 18.7 points.
Under financial conditions and access to credit, it stated that respondents’ outlook on the volume of total order and business activity in January 2020 remained positive at 15.2 and 16.4 points respectively.
Similarly, it added, the outlook on financial conditions (working capital) and average capacity utilisation remained positive as the indices stood at 14.7 and 18.4 index points respectively.
The CBN report also said that the respondents were positive on their ability to access credit from the banks in the review month as the index stood at 4.8 points.