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, even as they express growing confidence in the country’s economic outlook, according to the Central Bank of Nigeria’s (CBN) May 2026 Business Expectations Survey.

The Business Confidence Index (BCI) stood at 7.9 points in May, an increase from 3.9 index points in April, reflecting a mixed but generally positive outlook among businesses regarding the country’s economic environment.

The improvement in 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). More cautious sentiments reflect ongoing energy-related challenges (26.7 percent) and elevated geopolitical uncertainties (7.7 percent).

The survey showed that while firms remain optimistic about business conditions over the coming months, significant structural challenges continue to weigh on operations, expansion, and hiring decisions.

The survey found that insecurity ranked as the top business constraint with an index score of 72.9 points, while high and multiple taxes followed closely at 70.3 points. High interest rates scored 67.7 points, underscoring the impact of expensive credit on business operations and investment decisions.

Despite these challenges, firms across all sectors expressed optimism about future business activity. Respondents projected stronger economic conditions in June, August, and November 2026, with confidence levels expected to improve over the next six months.

“All sectors maintained a positive outlook on the macroeconomic environment for the current month, underpinned by an improvement in sentiments across key sectors when compared with the outlook in April 2026: agriculture increased from 2.7 to 9.4, services rose from 1.5 to 4.6, and industry strengthened from 8.8 to 12.5 index points, respectively,’ it said.

However, the survey revealed a concerning trend in the labour market. Although businesses expect higher activity levels and expansion opportunities, employment expectations remained negative across all sectors.

This suggests that firms are prioritising productivity and cost management over workforce expansion as they navigate a challenging business environment.

The report also showed that average capacity utilisation declined marginally to 55.9 percent in May from 56.0 percent in April, indicating that many businesses are still operating below their full productive potential.

Businesses nevertheless expect the naira to appreciate against the US dollar over the review period, reflecting optimism about macroeconomic stability. At the same time, respondents anticipate borrowing costs will remain elevated, reinforcing concerns over access to affordable financing.