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Business confidence level falls to 17%

By on October 15, 2013

The confidence level of doing business in Nigeria decreased from 24 per cent in the third quarter of 2013 to 17.6 per cent in the fourth quarter of the year, the Lagos Chamber of Commerce and Industry has said.

According to the chamber, the 6.4 per cent drop suggests that business leaders are likely going to be softer towards expanding their investments in Nigeria in the months to come.

It said the drop was witnessed across all sectors and regions in the country.

The LCCI, in a report made available to our correspondent on Sunday, stated that prior to the decline, the level of business confidence in the country had maintained a steady improvement over the first three quarters of the year. It was 10.5 per cent in Q1; 16.5 per cent in Q2 and 24 per cent in Q3.

“Factors such as poor access to credit, challenging security situation, dwindling public power supply and the increasing spate of non-performing trade credit largely contributed to the depressed index score,” the chamber said in the report.

It added that all the sectors, except manufacturing, reported positive but weak business confidence levels, and stressed that it was “mostly worried by the negative (minus two per cent) confidence level reported by operators in the manufacturing sector at this time.”

The chamber stated that over the last one year, the manufacturing sector had consistently remained at the bottom of Business Confidence Index league table by trending between negative and neutral confidence levels.

According to the LCCI, the most disturbing factors for manufacturers are the influx of imported and substandard products, poor access to credit, high cost of doing business and the inhibitive activities of government regulatory/monitoring agencies.

It stated that the agricultural sector remained impressive at 19 per cent from the adverse business confidence it posted in the first quarter of the year.

The chamber said, “The story suggests that while operators in the agricultural sector are hopeful of better days ahead, expansion and new investment in the Nigerian manufacturing sector will potentially remain held down by the lingering challenges confronting business environment in the country.”

On finance, it observed that the sector reported the largest drop of 20 points from 35 per cent in the third quarter to 15 per cent in the fourth quarter.

It said the drop was quite significant and a cause for concern in a sector that just reported profit with impressive performance.

The LCCI said, “Impact of the newly introduced 50 per cent Cash Reserved Ratio on public sector deposits by the Central Bank of Nigeria and the ongoing systemic challenge of the discount house businesses may partly explain the source of uncertainty currently brewing in the Nigerian financial system.”

 

 

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