Business Confidence Index in Nigeria drops by 7.7% in Q1

LCCI said in a statement on Friday in Lagos that its research showed that the drop represented 7.7 per cent slack of confidence level among business operators

The Lagos Chamber of Commerce and Industry says the Business Confidence Index for the first quarter of 2015 has fallen to 22.3 per cent from 30 per cent posted in the fourth quarter of 2014.
LCCI said in a statement on Friday in Lagos that its research showed that the drop represented 7.7 per cent slack of confidence level among business operators.
It said: “This is the largest quarter on quarter point drop of the BCI score over the last three years.
“Conventionally, movement of the BCI score by up to five points indicates the presence of significant positive or adverse development in the country’s economic/business environment.”
The News Agency of Nigeria reports that BCI is a leading economic indicator designed to measure the degree of optimism on the state of the economy expressed by business leaders through their activities.
The BCI survey covered 180 top business executives in 162 companies over the period.
The statement said that for years, Nigeria’s BCI scores continues to trail below the 50 per cent global business confidence threshold due to lingering infrastructural and institutional shortcomings.
“The Q1-2015 BCI survey presented far reaching and very worrisome picture about the state of the economy triggered by profound political uncertainty and oil price fluctuations,” it said.
According to LCCI, the decline of the BCI scores indicated that business leaders are pessimistic about expanding their business and investment spending over the next few months.
It said that the factors responsible for the slack were the uncertainty surrounding the 2015 general elections, falling crude oil price and the volatile exchange rate, which had depreciated the local currency.
It said: “Initial commercial plans and investment decisions across the economy have become very fragile leading to less than optimal operations and delay tactics by companies pending when things will start to normalise.
“The uncertainty has affected all the sectors of the economy.
“Operators in the oil and gas industry are disturbed by the delayed passage of the PIB and the adverse developments in the global oil and gas market.”
According to the statement, players in the professional business services sector are concerned with the delayed approval of the 2015 draft budget.
Besides, it said, there were concern about the influx and rising patronage of offshore consultants/advisers and the political risks.
It said: “Uncertainty relating to approval and contents of the 2015 budget, security challenges, regulatory issues and 2015 elections tops the concerns of players in the IT/Telecoms sector.
“For the trade sector, declining patronage due to weak consumer demand, depreciation of the (Naira), e-trade platforms and rising cost of goods and services are the concerns.”
The statement added that business leaders in the financial services sector were concerned with the macroeconomic fluctuations and flight to safety due to the general elections.
It said there were downgrade of sovereign ratings by international rating agencies, policy uncertainty, continued challenges of access to and cost of credit, weak transport and logistics constraints.
The statement said operators in the hotel and tourism sector confirmed there was a sharp drop in the number of events and conferences they hosted, occasioned by election uncertainties.
“Building and construction industry confirmed that election spending, delayed payment of contractors, weaker demand for real estate and increasing security challenges are issues that affected their business during the period,” it said.