By Babajide Komolafe
A Central Bank of Nigeria (CBN) survey has shown that private sector operators expect the naira to further depreciate and inflation to increase further before the end of the year.
According to the survey titled, “Business Expectations Survey, BES, for Fourth Quarter, 2016”, ‘Firms that participated expect the naira to further weaken in the current quarter, but to strengthen in the next quarter. However, inflation and borrowing rates were expected to rise in both the current and next quarters.”
The CBN stated that: “Respondent firms were pessimistic on the macro economy in Q4 2016. The pessimism was driven by the opinion of respondents from all the sectors: services, industrial, wholesale/retail trade and construction. “Respondents’ pessimism in the volume of total order and their internal liquidity positions (financial conditions), dampened the volume of their business activities in the current quarter.
Similarly, respondents’ pessimism on access to credit further lessened their internal liquidity positions in the quarter under review . “Participants indicated a positive outlook in the volume of business activities, as well as improved prospects for employment in the next quarter. The sectors with the prospects for employment were services, wholesale/retail trade, industrial and construction sectors. “The surveyed firms identified insufficient power supply as the major constraining factor to their business activities in Q4, 2016.
Other constraining factors were financial problems, high interest rate, unfavourable economic climate, competition, unclear economic laws and unfavourable political climate. “The BES is a quarterly survey of firms drawn from Business Establishments frame of the National Bureau of Statistics.
The BES result provides advance indication of change in the overall business activity in the economy and in the various measures of activity of the companies’ own operations as well as selected economic indicators “Respondents were drawn from the industrial, construction, wholesale/retail trade and services sectors.
The services sector is made up of financial intermediation, hotels and restaurants, renting & business activities and community & social services. “The distribution of firms by sector showed that services sector constituted the highest number of respondents (35.3 per cent), followed by wholesale/retail, industrial (24.3 per cent) and construction “A breakdown of the respondents by type of businesses showed that 13.8 per cent were import oriented, 2.0 per cent were export oriented, 7.8 per cent were both import and export oriented, and 76.4 per cent were neither import nor export oriented. “The distribution of firms by employment size showed that small size firms constituted 81.3 per cent of responses, medium size firms 14.2 per cent, and large size firms 4.5 per cent.”
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