Stanbic IBTC's Nigeria headline PMI at 53.3 in February

Stanbic IBTC's latest Purchasing Managers' Index (PMI) report for Nigeria revealed a headline figure of 53.3 in February, signaling a slower growth rate in the country's private sector. Gbolahan Taiwo, the Regional Economist for West Africa at Stanbic IBTC, recently joined CNBC Africa to delve into the specifics of the report and shed light on the factors influencing the moderation in growth. Taiwo pointed out that while the PMI figure of 53.3 still indicates expansion, it is a decrease from the higher figure of 59.1 recorded in May of the previous year. The economist attributed the rapid acceleration seen last year to the country's recovery from a recession in 2017, where weak employment numbers and consumer demand plagued the economy. Despite some improvements in 2018, the rate of growth has now stabilized, reflecting a more moderate increase. Taiwo acknowledged that consumer purchasing power remains a key concern, given the currency depreciation and rising prices of imported goods. He highlighted that wage growth has been stagnant, with the proposed minimum wage hike expected to provide some relief. However, Taiwo cautioned that the wage increase may not be sufficient to significantly boost consumer demand, especially in the face of escalating costs such as electricity tariffs. He emphasized the need for sustainable solutions to support consumer spending in the long run. The economist also addressed the challenges faced by businesses due to congestion at ports, which has hampered trade activities. Delays in clearing goods have led to disruptions in supply chains, affecting delivery schedules and slowing down business operations. These bottlenecks have contributed to a subdued economic growth outlook, with forecasts for 2019 hovering around 2.5%, below the levels needed for a robust recovery. Taiwo stressed that while there have been some marginal improvements in the trade and retail sectors, overall economic activity is yet to pick up significantly. The modest growth in these sectors reflects the lingering impact of weak consumer income and business sentiment on Nigeria's economy. In conclusion, the PMI report underscores the need for targeted interventions to address the structural challenges facing the private sector and boost sustainable growth in the Nigerian economy.