Nigeria’s Business Confidence Index declines the seventh successive month

The Nigerian economy continues to totter as latest headline Sales Manager’s Index (SMI) dropped slightly to 61.2 in March from 61.4 in February. Declines in sales, employment, business confidence and market growth combined to bring the March headline index to a record 12-month low.

The SMI is an indicator designed by World Economics Group to provide the most up-to-date monthly assessment of economic activity in Nigeria.

According to Ed Jones, chief executive of World Economics, the “Latest SMI data showed that the Nigerian economy continued to experience challenging conditions during March.”

For the seventh successive month, the Business Confidence Index declined to reach the lowest level in a year.

The latest report notwithstanding, majority of investors are still somewhat confident of the long-term outlook of the country. “March’s reading nonetheless indicated that the majority of panel members remained optimistic about future business conditions. Where weaker levels of business were signalled, companies commented on poor demand conditions, rising unemployment, high inflation, lower oil prices and unfavourable exchange rate conditions,” Jones noted.

The market growth index, which reflects growth of the general marketplace in panellists’ own industry sectors, saw robust rates of market expansion across the economy. The growth did not however match the rates experienced in the last five months and it was the lowest since March 2015.

Furthermore, the product sales index, which measures monthly sales made by panellists’ own companies was down at a very modest margin, for the first time since March 2015. The fall, according to panellists, was due to the general rise in prices charged.

A statement by World Economics noted: “The prices charged index increased to the fastest pace on record, with companies attributing this to the decline of the local currency which has raised prices of imported goods and contributed to the overall rise in inflationary pressures.”

There was also decline in employment levels at the first quarter of 2016, which according to the statement, reflected weaker demand conditions across the country. The staffing index was below 50.0 no-change mark for the first time in the survey history, “with some companies commenting on cost reduction efforts for the lower levels of employment. That said, the rate of job shedding was moderate overall,” said World Economics.

“The latest data,” Jones said, “suggest that the official rate of GDP growth will decelerate in the first quarter of the year.”