Cash Scarcity Severely Affected Private Sector In March, Says Stanbic IBTC

A report by Stanbic IBTC has revealed that the cash crisis in Nigeria had a severe impact on business conditions in the private sector in March.

The bank made this known in its Purchasing Managers’ Index report for March titled ‘Downturn deepens in March’.

It stated that “In fact, output and new orders fell more quickly than in February, while staffing levels and purchasing activity were scaled back again.

“While input costs and output prices continued to rise sharply, rates of inflation softened. Output prices increased at the softest pace in almost three years.

“Meanwhile, suppliers’ delivery times shortened after having lengthened in February.”

The report noted that PMI readings above 50.0 signalled an improvement in business conditions in the previous month, while readings below 50.0 showed a deterioration.

It stated that “The headline PMI posted 42.3 in March from 44.7 in February, moving further below the 50.0 no-change mark and signalling a sharper deterioration in business conditions in the Nigerian private sector.

“The decline was the most pronounced since the survey began in January 2014, apart from at the time of the outbreak of the COVID-19 pandemic in 2020.”

As was the case in February, it added, there were widespread reports from companies that customers were unable to commit to spending given cash shortages.

It stated that “The same picture was seen with regards to business activity, which decreased at a rate only exceeded in April and May 2020. All four broad sectors posted reductions in activity at the end of the first quarter.”

Companies reduced staffing levels slightly for the second month running, in part reflecting lower workloads but also due to difficulties paying wages.