Firms Optimistic about Economic Growth, Survey Reveals

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By Nume Ekeghe

The Central Bank of Nigeria’s (CBN) Monthly Business Expectation Survey for September 2018, has revealed that business operators were optimistic about the growth in the macro economy last month, compared with the previous month.

The report which was posted on the central bank’s website also revealed that firms anticipated that the naira would appreciate.

In addition, they stated the business operators highlighted hindrances affecting the firms and businesses.

The report showed that: “At 24.8 index points, respondents’ overall confidence index (CI) on the macro economy in September 2018 was more optimistic when compared with the level of 21.5 index points recorded in August 2018.

“The businesses outlook for October 2018 showed more confidence on the macro economy at 64.5 index points.

“The optimism on the macro economy in the current month was driven by the opinion of respondents from services (16.2 points), industrial (6.0 points), wholesale/retail trade (1.9 points) and construction sectors (0.6 points), whereas the drivers of the optimism for next month were services (38.3 points), industrial (18.8 points), wholesale/retail trade (4.9 points) and construction (2.5 points) sectors.”

The positive outlook by businesses in September 2018, according to the report, were driven by businesses that were “neither import- nor export-oriented (17.8 points), both import- and export-oriented (3.6 points) import-oriented (2.8 points), and those that are export-related (0.6 points).”

On financial condition and access to credit, it stated that respondents’ outlook on the volume of total order and business activity in September 2018 remained positive, as the index stood at 16 and 15.2 points, respectively when compared to 9.1 and 10 points, respectively recorded in the previous month.

Similarly, respondents’ outlook on financial conditions (working capital) and average capacity utilisation improved, as the indices stood at 11.6 and 18.3 index points, when compared with the 8.4 and 15.9 points, respectively recorded in August 2018.

However, respondents were pessimistic on access to credit in the review month, with an index of -0.7 points.

The report added: “The positive outlook in the volume of business activities (70.4 index points) and employment (24.4 index points) indicated a favourable business outlook in the next month.

“The employment outlook index by sector showed that the services sector (27.7 points) reported the highest prospects for creating jobs, followed by industrial (21.1 points), wholesale/retail trade (17.8 points), and construction sector (16.2 points).

Furthermore, it added: “The analysis of businesses expansion plans by sector next month showed that the services sector indicates greater disposition for expansion with an index of 24 index points followed by construction and wholesale/retail trade sectors with 18.5 and 16.7 index points 3.4.”

However, in terms of business constraints, the survey stated the firms identified insufficient power supply (65.9 points), high interest rate (54.9 points), unfavourable economic climate (53.6 points), financial problems (51.6 points), unclear economic laws (47.1 points), unfavourable political climate (46.9 points), insufficient demand (44.5 points) and access to credit (40.4 points) as major factors constraining business activity in the current month.

Also, on expectations on exchange rate, it states: “Majority of the respondent firms expect the naira to appreciate in the current and next months as the confidence indices stood at 29.9 and 41.5 points, respectively.

And on expectations on inflation and borrowing rates, “respondent firms expect inflation rate to fall in both the current and next months, with confidence indices of -4.7 and -13.9 points for the current and next months, respectively.

“Similarly, respondent firms expect borrowing rates to rise in both current month and next month as the confidence indices stood at 3.7 and 1.8 points, respectively.”

FG Assures Local Contractors, Professionals of Patronage

The federal government has restated its determination to give preference to Nigerian professionals in all government projects in order to grow the economy.

Besides, government has advised the private sector to invest in Research and Development (R and D) for manpower development so as to stimulate economic activities in the country.

Speaking at the launch of Polyurethane Laboratory donated to University of Lagos by Vitafoam, the Minister of Science and Technology, Dr. Ogbonna Onu, said for the first time in the history of Nigeria, the federal government recently issued Executive Order Five which makes it mandatory for all government parastatals and agencies to patronise Made –in-Nigeria products without compromising standards.

Onu, also announced the decision to give priority to Nigerian Professionals either in the country or diaspora before considering an expatriate in award of contracts.

He noted that it is only a project which there is no Nigerian professional that an expatriate can be engaged.

Onu explained that the bane of Nigeria’s economy was over-dependence on importation of goods which weakens currency, creates unemployment and consistently reduce the Gross Domestic Products (GDP).

He lamented that Nigeria had over the years relied on income from commodity products, the prices of which are externally determined.

“The federal government has issued Executive Order Five. Under this, government shall patronise locally made products.

“But the products must be of high standard. Preference shall be given to Nigerian professionals before an expatriate is considered for any project or contract.

“This implies that operators in the private sector must invest in research and development in order to meet international standard. They should collaborate with the universities in manpower training,”Onu said.

 In his keynote address, the company’s Group Managing Director and Chief Executive Officer, Mr. Taiwo Adeniyi, explained that the donation of a Polyurethane Laboratory to the University of Lagos was in fulfilment of the promise made to the University authority by the Chairman of Vitafoam Nigeria Plc, Dr. Dele Makanjuola, at the 2016 Scientific Conference of the University where he initiated the need for such in Nigeria.

 “We make bold to say that the equipment in this polyurethane laboratory is at par with any similar laboratory anywhere in the world.

“The choice of polyurethane laboratory as a CSR project was not merely for Vitafoam’s interest in the polyurethane industry.

“It was to honour and promote the efforts of Nigerian researchers and ensure their work is able to both compete well on the global stage and find relevance in industry.

“Among the key government agencies and parastatals that will find use for the services of this polyurethane laboratory include the Standard Organisation of Nigeria (SON), the Nigerian Automotive Design and Development Council (NADDC) – though they are currently working on one that will serve for different types of auto parts.

“Others are the Federal Ministry of Environment, the National Environmental and Enforcement Agency (NESREA), and the National Agency for Food and Drugs Administration and Control (NAFDAC).

 “It is expected that this specialized laboratory will be run as a commercial enterprise to generate revenue to fund other projects within the University.

“This polyurethane laboratory has a significant role to play in the federal government’s Nigeria Industrial Revolution Plan (NIRP), and recently the medium term Plan for Economic Recovery and Growth Plan (ERGP), said Adeniyi.

 He appealed to the federal government to continually evolve policies that engender ease of doing business in Nigeria in order to sustain enhance performance of the private sector.

According to him, government should endeavour to patronise products of the company because they are highly competitive.