An examination of actual performance of businesses in Nigeria in the first quarter of 2017 revealed that the business index stood at -5.4, with the manufacturing and service sectors showing positive performances with indices of 14.7 and 4.8, respectively.
These are part of key findings of the Nigerian Economic Summit Group (NESG) through its quarterly Business Confidence Monitor (BCM) for Q1 of 2017.
The BCM combines a set of qualitative leading indicators, such as Production, Investment, Export, Demand Conditions, Prices, Employment, and General Business Situation, to gauge the overall business optimism.
The BCM report indicated that Nigeria’s trade sector showed a decline with an index of -10.4; while the Industrial sector (excluding manufacturing) recorded an index of -0.4, representing mild decline in activities.
Indices for the leading business indicators reviewed such as production, operating profit and employment were at positive readings of 9.8, 8.2 and 4.7 respectively while cost of doing business and access to credit indices stood at negative trajectories of -41.3 and -23.7, respectively.
The BCM revealed a positive index of 34 which indicates positive sentiments and perception of business activities in the next two quarters-Q2 and Q3 2017. Indeed, expectations for output expansion, increased domestic sales, increased staffing levels and improved demand conditions appeared to drive this positive business outlook for this period.
On the aggregate, the BCM index stood at 14.4 suggesting that business managers are optimistic about business activities in the short term. This overall cautious optimistic outlook on business activities is driven by positive expectations in two major sectors such as Manufacturing and Services.
The report revealed that all leading indicators show positive sentiment and expectation across the board as managers were generally optimistic about business performance in the next two quarters.
This outlook is intuitively driven by improved efficiency in economic management (monetary, fiscal and trade), as well as the much-publicised Economic Recovery and Growth Plan (ERGP), which aims to deliver a Gross Domestic Product (GDP) growth of 2.2% in 2017; coupled with reforms to ease the business environment.
These factors are expected to influence the perception of business and economic outlook in Nigeria.
In conclusion, the BCM report was optimistic that improvement in local production and increased patronage of Nigerian-made goods and services would help in the rapid expansion of the economy.