Analysts task FG on unimpressive investor confidence in economy

GIVEN THE SUS TAINED SLUGGISH growth rates recorded in the nation’s manufacturing and nonmanufacturing purchasing managers’ indices (PMIs) in recent months, some economic experts have described the growth rates as not portending bright outlook for the economy, and charged the federal government to make the operating environment more conducive for businesses.

According to the latest report by the Central Bank of Nigeria (CBN), the nation’s manufacturing sector expanded for the 13th consecutive month in September 2019, with the sector’s PMI standing at 57.7 points while the non-manufacturing PMI recorded 58.0 points.

However, the index points during the month under review albeit grew at a slower rate when compared with the index recorded in the preceding month.

The economic experts at the Centre for the Studies of Economies in Africa (CSEA) in their latest Nigeria Economic Update Issue 39 noted that although the sustained increase in business confidence may provide an indication of a possible but slight growth in GDP estimates for the third quarter, the signals in the economic space suggested that businesses were still not optimizing their operations due to sundry challenges.

The analysts, therefore, canvassed the need for the Federal Government to urgently address sundry macro and micro hurdles the real sector operators were contending with in order to improve the Manufacturing PMI index points in the months ahead.

Specifically, the experts listed key constraints requiring government’s actions as insufficient power supply, high interest rate, multiplicity of taxes, and unfavorable economic climate, among others.

The CSEA analysts stated: “The manufacturing PMI reflects increase in business optimism in 13 out of 14 sub-sectors, with decline recorded only in the paper products sub-sector. Likewise, non-manufacturing PMI expanded and stood at 58.0 points but grew at a slower pace relative to the preceding month. Fourteen out of the seventeen surveyed subsectors recorded growth, with two sub-sectors declining and two unchanged.

“The declines were partly due to declining new export orders. The sustained increase in business confidence may provide an indication of a possible but slight growth in GDP estimates for the third quarter.

“Despite general optimism, firms continue to identify insufficient power supply, high interest rate, multiplicity of taxes, and unfavorable economic climate among others as major factors constraining business activities. These should be addressed for a significant leap in business confidence with positive effects on investor appetite and external trade”, the report added.