Erratic power, high interest rate, undermined business performance in 2018 — CBN

Business activities were slowed down by an insufficient power supply, high-interest rates and other challenges in 2018 financial period.

This was disclosed in the ‘monthly business expectations survey report’ by the Central Bank of Nigeria’s Statistics Department in December 2018.

The CBN, in the report, stated that “firms identified insufficient power supply, high-interest rates, unfavourable economic climate, financial problems, unclear economic laws, unfavourable political climate, and insufficient demand as the major factors constraining business activity in the current month.”

It, however, added that the respondent firms expected the naira to appreciate, and inflation and borrowing rates to rise in January 2019.

The highlights of the outcome of the business expectations survey in December 2018 also showed that respondent firms expressed more optimism on the macroeconomy in December 2018.

It stated that respondents’ outlook on the volume of the total order, business activity and financial conditions (working capital) were positive during the review period, and more optimistic when compared with the previous month.

The December survey was carried out from December 10 to 14, 2018, with a sample size of 1,050 businesses nationwide.

A response rate of 98.6 per cent was achieved, and the sample covered the services, industry, wholesale/retail trade, and construction sectors.

The respondent firms were made up of small, medium and large organisations covering both import- and export-oriented businesses.

Respondents’ outlook on the volume of total order and business activity in December 2018 remained positive, as the index stood at 22.9 and 22.7 points, respectively when compared to 17.4 and 18.7 points, respectively recorded in the previous month.

Equally, respondents’ outlook on financial conditions (working capital) and average capacity utilisation improved as the indices stood at 21.4 and 25.5 index points, when compared with the 13.0 and 20.8 points, respectively recorded in November 2018.

Respondents were relatively more optimistic about the access to credit in the review month, with an index of 2.2 points.

All sectors except the construction sector expressed optimism on own operations in December 2018.

Respondents from the construction sector expressed comparatively less optimism on own operations in the review month with an index of 0.0 points, when compared with the 0.1 points reported in November 2018.