Nigeria’sBSIFallsto8.7%inJanuary

The Standard Chartered Business Sentiment Indicator (BSI) for Nigeria fell to 8.7 per cent month-on-month in January to 61.7 points, its lowest level since August 2015. Part of the decline was likely seasonal, following the uptick in activity in December, according to the latest report obtained yesterday.

It also showed that sentiment weakened across the board in January as all five components of the headline BSI fell, and 13 of the 15 current conditions indicators were down monthon-month.

Furthermore, the report pointed out that the effect of the naira exchange rate remained the main drag on overall business conditions yet again given uncertainty on the timing of a forex adjustment and persistent concern about the availability of forex.

Sentiment towards the forex situation is likely to remain weak in February following January’s monetary policy committee ( MPC) meeting on which had expected forex market liberalisation had been centered.

Standard Chartered’s Chief Economist for Africa, Razia Khan, summarised this month’s indicator value, highlighting that: “The effect of the naira exchange rate was the main drag on overall business conditions yet again in January given uncertainty on the timing of an forex adjustment and persistent concern about the availability of forex for imports.

“As such, the indicator fell 13.4 per cent month-on-month to just 22.7.

President Muhammadu Buhari has continued to reiterate his support for forex restrictions given his belief in the potential fall-out from a weaker exchange rate. With political will seemingly against forex market liberalisation, an imminent adjustment to the official forex rate looks less certain, despite questions about the sustainability of the current forex regime in a lower oil-price environment. Forex reserves remain pressured.