Access to credit, high cost remain biggest concern as firms‘ confidence grows

Nigerian firms have continued to grapple with limited access to credit and high cost of doing business even as the economy recovers and confidence persists for the seventh consecutive month, according to the Nigerian Economic Summit Group-Stanbic IBTC Business Confidence Monitor.

According to the latest report for August, the Current Business Index rose to 107.3 points, up from 105.4 points in July 2025, driven by stronger performance in technology, finance, manufacturing, energy, and logistics, supported by targeted investments and ongoing reforms.

“These gains were tempered by structural bottlenecks affecting operational efficiency and business profitability. Major constraints restricting growth and performance in August 2025 were limited financing access, unclear economic policies, unreliable electricity supply, high lease and rental costs, and persistent insecurity,” NESG wrote in its monthly report.

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“Key sub-indices of the BCM, including investment, exports, access to credit, and prices, registered lower values relative to July 2025. The cost of doing business also rose in August, reversing the marginal relief of the previous month.”

The report indicated that input prices continued to worsen during the period under review despite inflation cooling for the fourth straight month in July to 21.88 percent.

Businesses operating in Africa’s most-populous nation endured two years of macroeconomic instability that saw the naira lose about 70 percent of its value against the dollar, inflation accelerated to a near 29-year high in December and the central bank raised interest rates to a record high.

But a higher-for-longer rate is giving companies in Africa’s top crude producer a tough time. Firms are opting to issue short-term debt rather than long-term notes to take cover from high borrowing costs.

Companies issued N1.8 trillion in debt maturing in less than a year in the 13 months through June, compared with just N197.3 billion raised in two- to seven-year tenors over the same period, data compiled by Lagos-based FMDQ shows.

“High interest rates in Nigeria slow economic development, making credit expensive, hurting SMEs, and fueling unemployment,” said a Lagos-based financial analyst.

Read also: Power shortage, FX instability impeding businesses in Nigeria – NESG

The NESG–Stanbic IBTC Future Business Expectation Index offers more optimism as the index was 131.5 points in August, reflecting a stronger outlook compared to 126.1 points in July 2025 with trade being the most promising at 168.9 points and Agriculture, at 107.2 points, recorded the lowest expectation of improved conditions.

“Sentiment moderated across all sectors relative to the prior month, underlining cautious optimism in the face of persistent macroeconomic headwinds,” the report stated.

“Despite this softening, overall optimism remains anchored on factors such as seasonal economic activity, ongoing policy adjustments, relative exchange rate stability, infrastructure spending, and the gradual rebound in consumer demand.”