- Survey Shows Positive Prospect of Business Expansion
The fourth quarter (Q4) 2016 Business Expectation Survey has indicated that at 46.5 index points, the positive outlook in the volume of business activities reflects prospects for expansion in the first quarter of 2017.
Also, the employment index stood at 23.4 points, indicating a favourable outlook. The employment outlook index by sector, showed that the services sector (10.4 per cent) had higher prospects for creating jobs, followed by the wholesale/retail trade (5.7 per cent), industrial (4.5 per cent) and construction (2.7 per cent) sectors.
The Central Bank of Nigeria (CBN), revealed this in a report posted on its website.
The Q4, 2016 Business Expectations Survey (BES) was carried out during the period October 24th to November 04th 2016 with a sample size of 1,950 business enterprises nationwide. A response rate of 99.5 per cent was achieved during the reporting quarter, and covered the Industry, Construction, Wholesale/Retail Trade and Services sectors.
The survey was conducted from the updated survey frames of both the CBN and the National Bureau of Statistics (NBS). The survey response rate was 99.5 per cent in the quarter under review.
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 (26.2 per cent), industrial (24.3 per cent) and construction (14.2 per cent).
Continuing, a further analysis of businesses with expansion plans by sector in the next quarter showed that the wholesale/retail trade indicated disposition for expansion with an index of 61.0 points. Similarly, construction, services and industrial sector firms indicated expansion plans for Q4, 2016 with indices of 58.3, 56.5 and 55.3 points, respectively.
The surveyed firms identified insufficient power supply (62.4 index points), financial problems (55.6 index points), high interest rate (53.8 index points), unfavourable economic climate (52.7 index points), competition (44.1 index points), unclear economic laws (43.5 index points), unfavourable political climate (38.5 index points), access to credit (37.3 index points) and insufficient demand (36.5 index points) as the major factors constraining business activity in the current quarter.
Also, 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 (Table 2, sections 16). 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.
The overall confidence index (CI), which stood at –29.0 points in Q4 2016, indicated respondent firms’ pessimism on the macro economy, however at 32.2 points, the overall CI points to greater confidence on the macro economy in the next quarter.
The pessimistic outlook of respondents in the current quarter was driven by the opinion of respondents from services (-9.4 points), industrial (-7.9 points), wholesale/retail trade (-7.5 points) and construction (-4.2 points ) sectors. Conversely, the expected drivers for the optimism on the macro economy in the next quarter are services (12.3 points), wholesale/retail trade (8.4 points), industrial (6.5 points) and construction (4.0 points) sectors.
Also, the drivers (by type of business) of the pessimism on the macro economy in the current quarter were “neither importer nor exporter” (-22.0 per cent), followed by “importer” (-3.9 per cent) and ‘both importer & exporter” (-2.8 per cent). In addition, the drivers (by size of business) of the pessimism on the macro economy in the current quarter were the small (-23.7 per cent), medium (-4.3 per cent) and large (-1.0 per cent).
” The financial condition index in the current quarter stood at -17.6 per cent and was driven by the wholesale/retail trade (-5.5 points), industrial (-5.1 points), services sector (-4.0 points) and construction (-3.0 points) sectors.
“Respondents’ pessimism in the volume of total order and 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 review quarter,” the report added.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
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