Central Bank of Nigeria : Business Expectations Survey Report for September 2020

Central Bank of Nigeria

Statistics Department

September 2020

Business

Expectations

Survey Report

Table of Contents	Page
1.0	Highlights	3
2.0	Introduction	3
3.0	Business Outlook	4
	3.1	Business Confidence on Own Operations by Sector	4
	3.2	Financial Conditions, Access to Credit and Installed Capacity	5
	3.3	Employment and Expansion Plans	5
	3.4	Business Constraints	6
	3.5	Expectations on Exchange Rate	6
	3.6	Expectations on Borrowing Rates	6
	3.7	Expectations on Level of Inflation	7
	3.8	Expectations on Economic Growth Rate	7
	3.9	Opinion on Control of Inflation	7
List of Figures
	Fig. 1a: Distribution of Respondent Firms by Sector	3
	Fig. 1b: Percentage Distribution of Respondent Firms by Employment Size	3
	Fig. 1c: Percentage Distribution of Respondent Firms by Type of Business	3
	Fig. 2: Overall Business Outlook on the Macro-economy	4
	Fig. 3: Sectoral Contributions to the Overall Business Outlook Index	4
	Fig. 4: Business Confidence Index on own operations by Sector	4
	Fig. 5: Business Outlook Index on own operations	5
	Fig. 6: Employment Outlook Index on own Operations by Sector	5
	Fig. 7: Businesses with Expansion Plans	5
	Fig. 8: Business Constraints	6
	Fig. 9: Business Expectation Index on Naira Exchange Rate	6
	Fig 10: Business Expectation Index on Borrowing Rate	6
	Fig 11: Business Expectation Index on Level of Inflation	7
	Fig 12: Business Expectation Index on Economic Growth Rate	7
	Fig 13: Respondent Outlook on Control of Inflation	7
Annexes
	Table 1: Business Expectations Survey data	9
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A Monthly Publication of the Central Bank of Nigeria

1.0 Highlights

September 2020

The Business Expectation Survey (BES) for September was conducted online in line with the social distancing directive of the Federal Government.

The highlights of the September 2020 survey outcome:

• Respondent firms expressed pessimism on the macro economy.
• Respondents' outlook on volume of total order, access to credit and financial conditions (working capital) were negative. However, their outlook on volume of business activity and average capacity utilization were positive in September 2020.
• Respondent firms identified insufficient power supply, unfavourable economic climate, financial problems, high interest rate, competition, unclear economic laws, unfavourable political climate, insufficient demand, access to credit and lack of equipment as major factors constraining business activity in the current month.
• Respondent firms expect the Naira to depreciate in the current month but to appreciate in the next month, next 2 months and next 6 months. Inflation level is expected to rise in the next 6 and 12 months, while borrowing rate is expected to rise in the current month and next month, next 2 months and the next 6 months.

2.0 Introduction

The September 2020 Business Expectations Survey was conducted online from Septemer 7-11, 2020 with a sample size of 1050 businesses nationwide. A response rate of 99.6 per cent was achieved, and the sample covered the agric./services1, manufacturing, wholesale/retail trade, and construction sectors (Fig. 1a, Table 1). The respondent firms were made up of small, medium and large corporations covering both import-oriented and export-oriented businesses (Figs. 1b and 1c, Table 1).

3.0 Business Outlook

At -17.0 index points, the overall expectation on the macro economy was pessimistic in September 2020. However, respondents are optimistic in their outlook for October with a confidence index of 25.5.

1The agric./services sector is made up of Financial Intermediation, Hotels & Restaurants, Agric and Other Business activities and Community & Social Services

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They also expressed optimism in the overall business outlook for November 2020 and March 2021 as shown in a greater confidence of the economy at 34.5 and 53.1 index points, respectively (Fig.2).

The pessimism on the macro economy in the current month was driven by the opinion of respondents from agric./services (-8.5 points), manufacturing (-5.9 points), wholesale/retail trade (-1.4 points) and construction (-1.1 points). The major drivers of optimism for next month were agric./services (13.5 points), manufacturing (9.4 points), wholesale/Retail (1.8 points) and construction (0.9 point) (Fig. 3, Table 1).

Further analysis revealed that businesses that are neither import nor export-oriented(-12.1 points), import-oriented(-2.8 points), both import- export-oriented(-2.0 points) and export-oriented(-0.1 point) drove the negative business outlook for the month under review.

3.1 Business Confidence on Own Operations by Sector

All sectors expressed pessimistic opinions on own operations in the review month as respondents from wholesale/retail, construction, manufacturing and agric./services sectors reported outlooks of -0.3, - 0.5, -1.4 and -2.2 index points, respectively (Fig 4, Table 1).

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