Monday 16 April 2018 BUSINESS DAY A1
A2 NEWS BUSINESS DAY C002D5556 Business confidence index rises to 24.5 point in March - CBN HOPE MOSES-ASHIKE Nigerian businesses are showing more confidence in the macro economy as the overall Confidence Index (CI) rose to 24.5 index point in March, from 14.5 index points recorded in February 2018. The March 2018 Business Expectations Survey (BES) was carried out by the Central Bank of Nigeria (CBN) between March 12 and 22, with a sample size of 650 businesses nationwide. A response rate of 91.8 percent was achieved, and the sample covered the services, industry, wholesale/retail trade and construction sectors. The respondent firms were made up of small, medium and large organisations covering both import- and exportoriented businesses. The optimism in the current month was driven by the opinion of respondents from services (13.9 points), industrial (7.5 points) construction (1.8 points) and wholesale/retail trade sectors (1.2), while the drivers of the optimism for next month were services (38.5 points), industrial (16.8 points), construction 4.9 points) and wholesale/retail trade (4.0 points) sectors. The positive outlook by type of business in March 2018 was driven by businesses that are both import- and export-oriented (29.1 points), those that are neither importnor export-oriented (25.9 points), businesses that are export-related (23.5 points), and those that are import- oriented (17.7 points). However, the surveyed firms identified insuffi- Monday 16 April 2018 I&E window success snaps Nigeria’s dependence on CBN dollar supply LOLADE AKINMURELE …as deals hit $16.6bn in 2018 Some $16.6 billion worth of deals have been done on Nigeria’s Investors and Exporters (I&E) window year to date, the latest sign that Africa’s largest economy is recovering from a paralyzing dollar shortage that curbed growth and hurt businesses in need of the greenback for critical imports. What is perhaps more telling is that the success of the I & E window in attracting autonomous supplies is helping the foreign ex- change market be relatively less dependent on central bank supplies upon which it was heavily reliant in 2016 after independent sources gummed up in reaction to capital controls. According to data provided by trading platform, FMDQ, the total value of trades recorded on the I & E window for the week-ended April 6, 2018 was $1.34 billion, a 3.9 percent increase from the previous week. Those I&E deals accounted for 80 percent of trading activity in the Spot FX market between the commercial banks and their clients that same week, which stood at $1.656 billion, an indication that the foreign exchange market is growing less dependent on CBN supply, which traders say account for less than 15 percent of dollar supply on the I&E window. The CBN supplied nearly 80 percent of dollars to the foreign exchange market in the thick of a brutal scarcity in 2016, burning through its external reserves at blistering pace to keep up with the dollar demand of households and businesses. When those antics proved no more than a drop in an ocean, following a demand backlog that has grown in excess of $7 billion, the apex bank unveiled the I & E window in April 2017, as part of a sweeping reform to lure dollars back to its shores in the wake of acute shortages created by a plunge in the global price and production of oil and capital controls that curbed foreign investment inflows in 2016. This time, the central bank would allow the market to determine the exchange rate at which to trade, in a departure from the false float in June 2016 after which the apex bank continued to manipulate the market in defense of the naira value against the dollar, despite announcing to limit its interventions. The move turned out successful, with the window attracting some $42 billion since inception, according to FMDQ data. For context, that amount is the same as Egypt had in its external reserves as of February 2018 and is more than double the level of Nigeria’s external reserves in 2016 and is only $4 billion behind the current reserves of $46 billion. In that period, the naira has been relatively stableaveraging N360 per US dollar- while the stock market has rallied to a 3-year high, as foreign portfolio investors lap up Nigerian assets from stocks to bonds.