Nigerian businesses struggle with insecurity, multiple taxes despite rising confidence
Nigerian businesses are grappling with a harsh operating environment marked by insecurity, multiple taxation, and elevated borrowing costs.
Nigerian businesses are grappling with a harsh operating environment marked by insecurity, multiple taxation, and elevated borrowing costs. However, they continue to express growing confidence in the country’s economic outlook, according to the Central Bank of Nigeria (CBN) May 2026 Business Expectations Survey.
The Business Confidence Index (BCI) stood at 7.9 points in May, a notable increase from the 3.9 index points recorded in April. This trajectory reflects a mixed but generally positive outlook among corporate leaders regarding the domestic economic environment.
This improvement in market sentiment was largely supported by a perceived easing of governance and policy-related concerns (15.7 percent) and continued progress in economic diversification (15.6 percent). Conversely, more cautious sentiments reflect ongoing energy-related challenges (26.7 percent) and elevated geopolitical uncertainties (7.7 percent).
The survey demonstrated that whilst firms remain optimistic about business conditions over the coming months, significant structural challenges continue to weigh on daily operations, capital expansion, and hiring decisions.
According to the data, insecurity ranked as the premier business constraint with an index score of 72.9 points. High and multiple taxes followed closely at 70.3 points, whilst high interest rates scored 67.7 points, underscoring the severe impact of expensive credit on corporate operations and investment decisions.
Despite these persistent challenges, firms across all major sectors expressed optimism about future business activity. Respondents projected stronger economic conditions in June, August, and November 2026, with overall confidence levels expected to improve over the next six months.
The apex bank report noted that all sectors maintained a positive outlook on the macroeconomic environment for the current month. This trend was underpinned by an improvement in sentiments across key sectors when compared with the outlook in April 2026. Specifically, agriculture increased from 2.7 to 9.4 points, services rose from 1.5 to 4.6 points, and industry strengthened from 8.8 to 12.5 index points.
However, the survey revealed a concerning trend in the domestic labour market. Although businesses expect higher activity levels and expansion opportunities, employment expectations remained negative across all sectors.
This disparity suggests that firms are prioritising productivity gains and rigorous cost management over workforce expansion as they navigate a challenging corporate landscape.
The report also showed that average capacity utilisation declined marginally to 55.9 percent in May from 56.0 per cent in April. This drop indicates that many businesses are still operating well below their full productive potential.
Businesses nevertheless expect the naira to appreciate against the US dollar over the review period, reflecting optimism regarding macroeconomic stability. At the same time, respondents anticipate that borrowing costs will remain elevated, reinforcing deep-seated corporate concerns over access to affordable financing.
