Nigeria’s Business Outlook Drops in October as Businesses Expect Borrowing, Inflation Rate to Surge

Businesses surveyed by the Central Bank of Nigeria in the month of October expect the borrowing and inflation rates to increase in the country.

In its October 2020 Business Expectations Survey Report, the majority of 1,050 companies surveyed expressed pessimism on the macro fundamental of the nation.

The report noted that the business confidence index dropped in October but slightly better at 37.9 for the month of November.

“Respondents’ outlook on volume of total order, volume of business activity, average capacity utilisation and financial condition (working capital) were positive. However, their outlook on access to credit was negative in October 2020,” it said.

The central bank said it conducted the survey online between October 12 and 16 using a sample size of 1,050 businesses nationwide.

It said, “Respondent firms expect the naira to depreciate in the current month, but appreciate in the next month, next two months and next six months, as their confidence indices stood at -6.6, 8.4, 18.3 and 35.0 index points respectively.

“Respondent firms expect borrowing rates to rise in the current month, next month, next two months and the next six months with indices of 16.2, 13.5, 16.2 and 15.8 points respectively.”

According to the apex bank, the companies expect the average inflation rate to expand in the next six months to 13.30 while they predicted it would hit 13.55 percent in the next 12 months.

“Respondent firms expressed dissatisfaction with the management of inflation by the government, with a negative net satisfaction index of -24.2 in October 2020,” it said.

The central bank, however, said the companies surveyed were optimistic about the volume of business activities for the months of November and December, with 56.2 and 62.7, respectively.