N igerians have listed lack of power as the lead among the constraints they face in running business in Nigeria. This is contained in the August 2019 Business Expectations Survey Report released on Tuesday by the Central Bank of Nigeria. Lack of power came top with 65.9 index point from the analysis of the business constraints correspondence. Followed closely are High interest rate with 56.5 points and financial problems with 53.7 points. Other major constraints identified are unfavourable economic climate (53.5 points), unclear economic laws (50.8 points), unfavourable political climate (47.0 points), insufficient demand (46.0 points), access to credit (45.6 points) and competition (43.0 points).
The survey which was conducted from August 12-21, 2019 with a sample size of 1050 businesses nationwide had 60.2 percent of its respondents firms from the small business, 27.2 percent from the medium business while the remaining 12.6 percent is from the Large business.
However, the respondents were optimistic about a range of indices. On Financial Conditions and Access to Credit, there was positive outlook on the volume of total order and business activity with indices 12.7 and 14.3 points respectively. Similarly, respondents were optimistic in their outlook on financial conditions (working capital) and average capacity utilization as the indices stood at 11.1 and 15.9 index points, respectively while access to credit in the review month had an index of 2.9 points.
The report further states that the service industry leads the firms that expect to expand employment in the next month with an index of 28.9 points followed by the wholesale/retail trade with an index of 25.3 points. Coming behind are the industrial and construction sectors with indices of 22.0 points and 12.9 points respectively.
Respondent firms expect the naira to appreciate in the current month, next month and next twelve months as their confidence indices stood at 27.5, 38.4 and 52.3 index points, respectively. In the same positivity, borrowing rates is expected to rise in the current month, next month and the next twelve months with confidence indices of 5.5, 3.1 and 4.6 points, respectively.
At 28.6 index points, respondents expressed optimism on the overall confidence index (CI) on the macro economy in the month of August 2019. The business outlook for September 2019 showed greater confidence on the macro economy with 64.7 index points
This report in summary shows that the small and medium businesses are more affected by the epileptic power situation in the country. The reason is that by leveraging on the economy of scale, larger firms are better placed to cope with the cost of provision of alternative source of power as against the small and medium firms that struggle to keep down overheard. Yet these group of businesses are more optimistic of capacity and employment expansion.
