Businesses remain optimistic despite high taxes, insecurity – CBN report

Businesses in Nigeria remained cautiously optimistic about the macroeconomic environment in June 2026, despite ongoing challenges such as high taxes, security threats, and elevated interest rates, according to the Central Bank of Nigeria's (CBN) latest Business Expectations Survey (BES). The survey, which covered 1,900 enterprises nationwide, revealed that while optimism persisted, key operational hurdles continued to weigh heavily on business operators. Conducted between 8 and 12 June 2026, the BES marked a methodological shift from its earlier approach, adopting a five-point scale instead of the previous three-point weighted diffusion index. This change aimed to offer a more detailed understanding of business sentiment. The updated survey found the Business Confidence Index (BCI) at 7.2 points, reflecting sustained optimism among formal businesses. However, this optimism came amid growing concerns over economic stability. Respondents highlighted several pressing issues affecting their operations. High or multiple taxation emerged as the primary constraint, with 73.7% of surveyed businesses citing it as a significant challenge. Insecurity followed closely behind, mentioned by 71.7% of participants, while high interest rates affected 67.0% of businesses. Other notable concerns included an unfavourable political climate (63.5%), high bank charges (61.9%), poor infrastructure (58.5%), and financial constraints (58.2%). These factors collectively underscored the complex operating environment faced by Nigerian businesses. The survey attributed the relatively positive sentiment to two main drivers: economic diversification, which accounted for 38.3% of positive responses, and expansionary fiscal policy, contributing 16.2%. Conversely, cautious views were influenced by energy-related challenges (23.4%) and heightened geopolitical uncertainties (16.5%). These elements highlight the dual pressures of domestic instability and external volatility shaping business outlooks. Sectoral analysis revealed varying degrees of confidence across industries. Mining and quarrying led with the highest Business Confidence Index at 42.9 points, accompanied by robust capacity utilization. Confidence remained generally positive across all sectors for the coming six months, though the industry and services sectors exhibited slightly weaker confidence levels in June compared to the prior month—12.5 to 10.9 points respectively. Regionally, businesses in Northern Nigeria demonstrated higher confidence than those in the south, with the South-East and South-South expressing negative expectations for the immediate future. Meanwhile, the North-East showed the strongest optimism regarding medium-term prospects. Looking ahead, businesses anticipated improvements in business activity volumes in July, September, and December 2026. The volume of business activity index reflected the highest confidence level among the surveyed indicators. Despite this, the Financial Condition Index and Credit Access Index remained positive but lagged behind other metrics, suggesting that financing conditions and credit accessibility still pose challenges requiring urgent attention. The survey also touched upon employment expectations, revealing mixed sentiments. While the mining and quarrying sector displayed the strongest expansion outlook at 84.6 index points, other sectors showed varied projections. This divergence highlights the uneven impact of economic conditions on different parts of the economy. As the country navigates these challenges, the CBN will likely monitor evolving trends in business sentiment, particularly in response to policy interventions and global economic shifts. The upcoming months will be crucial in determining whether the current optimism translates into tangible growth and stability for Nigerian businesses.