Monday, January 15, 2018 /01:17PM /FBNQuest Research 

Small and medium-sizedenterprises (SMEs) are regarded as growth engines for developing economies.However, for Nigeria, a large proportion are unrecorded since most SMEs fallwithin the country’s informal sector. 

Industry sourcessuggest that SMEs account for about half of Nigeria’s GDP. Business confidencedwindled due to the macro challenges over the past two years, stifling growthfor SMEs. However, in light of Nigeria’s exit from recession, there is now amore stable macroeconomic outlook and, by extension an uptick in businessconfidence.



The CBN’s Q4 2017survey on business expectations was released recently; it captured views from1,950 business enterprises nationwide (95% of which were SMEs). 

The survey showed thebusiness confidence index for Q4 2017 at 17.7 points (indicating respondents’overall optimism on the macro economy), compared with -29.0 points in thecorresponding period of 2016. 

Additionally, thesurvey revealed that the average capacity utilisation index stood at 3.4 pointsin Q4 2017, compared with -8.6 points in Q4 2016. The key drivers for thisrelatively positive reading were identified as increased business activity aswell as improved internal liquidity positions for firms within the survey. 

Insufficient powersupplies were cited as the major constraining factor on business activities.Other factors were financial related. However, respondents expect inflation andborrowing rates to decline in 2018. 



For business confidenceto maintain this upward trend, consumption trends have to rise. However,structural issues also need to be addressed. We applaud the authorities fortheir continuing efforts in improving the country’s business environment. 

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