The February Purchasing Managers’ Index (PMI) data released by Stanbic IBTC Bank indicated that the nationwide cash shortage in February could negatively affect the private sector midway through the first quarter of the year. This follows a period in February when Nigerians faced severe fuel and naira scarcity.
The report noted that the headline PMI fell below the 50.0 no‑change mark, dropping to 44.7 from 53.5 in January. Business conditions deteriorated markedly, ending a 31‑month streak of expansion. The decline in operating conditions was the sharpest since the survey began in January 2014, excluding the initial wave of the COVID‑19 pandemic in the second quarter of 2020.
The most severe impacts of the cash shortage were observed in output and new orders, both of which fell substantially as customers often could not secure the funds needed to spend. The decline in new orders was the first since June 2020, while the drop in output ended a seven‑month period of growth. In both cases, the reductions were the most pronounced in the survey’s history, apart from the early COVID‑19 pandemic period.
With new orders and output falling, companies reduced input buying and staffing levels accordingly. These declines were the first in 32 and 25 months, respectively. The decrease in purchasing reflected not only weaker customer demand but also companies’ difficulties in finding funds to pay for items.
The report also highlighted that cash scarcity led to higher fuel prices and increased operational costs for businesses and organisations. Higher raw‑material costs and currency weakness further pushed up purchase prices. Although the inflation rate was the softest since June 2020, it remained notable and above the series average. Staff costs rose again in February, albeit at a modest pace.
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