By Omoh Gabriel
Lagos Chamber of Commerce and Industry, a body of organised private sector operators in the Nation’s commercial center, weekend said that though the Business confidence index of Nigeria in the second quarter of 2013 has improved, it is still far below the international bench mark. Business Confidence Index BCI, is a leading economic indicator designed to measure the degree of optimism on the state of the economy that business leaders are expressing through their investment disposition. Decreasing business confidence is often a pointer to slowing economic activities because business owners are likely to decrease their investment. The idea is that the more confident business owners and managers feel about the economy, the better disposed they would be to make new investments and create job opportunities.
The 2nd quarter 2013 BCI survey according to LCCI covered 14 sectors, 37 subsectors and 600 top business executives’ respondents over the period, 15th February to 16th march 2013.
According to the outcome of the Chamber’s survey released weekend and signed by Muda Yusuf, Director General Lagos Chamber of Commerce and Industry “The second quarter of 2013 aggregate Business Confidence Index BCI, recorded a modest improvement of 16.5 per cent from the 10.5 per cent it achieved in the first quarter of 2013. This represents a six point movement of the index along a positive trajectory. This improvement notwithstanding, BCI scores for Q1 and Q2, 2013 continues to trail far below the 50 per cent global confidence threshold. Investors and business leaders are still wary about the state of the economy and the unfriendly doing business environment”.
Mudal Yusuf said “The result of the factors that weakened the index score includes: poor access to credit, inhibitive tendencies of monitoring and regulatory agencies, sustained insecurity situation across the country, dwindling public power supply and budget approval/implementation crisis.
“Macroeconomic factors such as exchange rate and inflation rate exerted neutral influence on the Q2, 2013 BCI score. The neutral impact of macroeconomic prices on businesses at this time is informed by the relative stability achieved over the last few months. However, the downside remains that the current stabilisation of prices through monetary tightening has been achieved at the expense of investment, employment, output and growth.
“The real sectors – agriculture, manufacturing and solid mineral reversed the negative confidence they posted in Q1, 2013 survey by joining other sectors on the positive confidence trajectory. Notwithstanding, the real sectors remains at the bottom leader with very low confidence levels at 7 per cent, 5 per cent and 2 per cent scores respectively. Impressively, hotel/restaurant, IT/telecoms, finance and professional services sectors continues to lead the sectors with the highest confidence levels at 35 per cent, 27 per cent, 21 per cent and 17 per cent respectively.
According to the LCCI boss “Businesses located in the South West Nigeria are the most confident with BCI score of 38 per cent. This is followed by companies operating in the South East and South South with BCI score of 29 per cent and 19 per cent respectively. Expectedly, businesses located in North East, North West and North Central sustained negative confidence at BCI score of -2 per cent, -1.5 per cent and -0.1 per cent respectively. While we note the resilience of businesses operating in the southern Nigeria for keeping up amid increasing threats, the worsening security situation may have caused severe setback to businesses and potential investment particularly in the North and the country in general.
Concluding LCCI boss said “The business environment remains largely constrained by rising socioeconomic uncertainties. This has kept the BCI scores trailing far below the global optimum levels. However, with the progress made so far on the privatisation of the Nation’s power sector, the commencement of the implementation of the 2013 budgets across the states and the FG, and the new momentum given to the consideration of the Petroleum Industry Bill by the National Assembly, we look to see how far this will reflect in the outcome of our Q3-2013 BCI survey and outcome”.
