Nigeria’s formal businesses identified multiple taxation, insecurity and high interest rates as their biggest operational constraints in June 2026, although overall business confidence remained positive despite prevailing macroeconomic pressures.
The latest Business Expectations Survey (BES) by the Central Bank of Nigeria (CBN) showed that the Business Confidence Index (BCI) stood at 7.2 points in June, signalling continued optimism among businesses even as firms grappled with a challenging operating environment.
The report showed that business sentiment is expected to strengthen over the coming months, with the confidence index projected to rise to 17.6 points in July, 24.1 points over the next three months, and 30.9 points over the next six months.
According to the survey, businesses expect economic activity to improve during the second half of the year, supported by economic diversification efforts and expansionary fiscal policies.
However, respondents warned that structural challenges continue to weigh heavily on business operations.
Among the most pressing concerns, high or multiple taxation ranked first with an index of 73.7 per cent, followed closely by insecurity at 71.7 per cent and high interest rates at 67.0 per cent.
Other significant constraints identified by respondents included unfavourable political climate (63.5 per cent), high bank charges (61.9 per cent), unfavourable economic climate (61.0 per cent), unclear economic laws (59.5 per cent), competition (59.5 per cent), poor infrastructure (58.5 per cent) and financial constraints (58.2 per cent).
Despite these challenges, respondents maintained confidence in the broader economy.
The report noted that optimism was largely driven by economic diversification, cited by 38.3 per cent of respondents, while 16.2 per cent attributed their positive outlook to expansionary fiscal policy.
On the downside, energy-related challenges accounted for 23.4 per cent of the factors behind cautious sentiment, while elevated geopolitical uncertainties accounted for 16.5 per cent.
Sectoral analysis showed that all major sectors remained optimistic about their own operations during the review month. The Mining and Quarrying sector recorded the highest Business Confidence Index at 42.9 points, followed by Agriculture (32.3 points), Construction (32.0 points), Market Services (30.5 points), Manufacturing (27.7 points) and Non-Market Services (26.7 points).
Similarly, the survey found that businesses expect the volume of economic activity to continue expanding. The Volume of Business Activity Index recorded the highest confidence among key operational indicators, reaching 13.3 points, ahead of the Volume of Total Orders Index (12.8 points), Financial Condition Index (10.8 points) and Credit Access Index (9.2 points).
Businesses also projected stronger activity levels in the months ahead, with the Volume of Business Activity Index expected to increase to 23.7 points in July, 30.0 points over the next three months, and 38.7 points over the next six months.
While expansion plans remained positive, firms expressed caution regarding employment. The report noted that hiring expectations for July were generally subdued across sectors, although the Mining and Quarrying sector posted the strongest expansion outlook at 84.6 points.
On exchange rate expectations, respondents anticipate a gradual appreciation of the naira against the United States dollar throughout the review periods.
The exchange rate expectation index rose from 3.5 points for the current month to 18.5 points next month, 26.2 points over the next three months, before moderating slightly to 21.4 points over the next six months.
However, businesses expect borrowing costs to remain elevated. The borrowing rate expectation index stood at 20.1 points for the current month, rising to 21.7 points next month, 20.2 points over the next three months, and 10.4 points over the next six months, indicating expectations of continued high lending rates despite some moderation over time.
Capacity utilisation remained broadly stable during the period, easing slightly from 55.9 per cent in May to 55.3 per cent in June. The Mining and Quarrying sector recorded the highest capacity utilisation among all sectors during the month.
Regionally, respondents in Northern Nigeria expressed stronger confidence than their Southern counterparts during the current month. While expectations for next month remained positive in most regions, the South-East and South-South recorded negative outlooks. Over the three- and six-month horizons, however, all regions returned to positive territory, with the North-East expressing the strongest optimism.
The CBN noted that the Business Expectations Survey is conducted monthly among leading firms selected from the updated Business Establishment frame developed jointly with the National Bureau of Statistics (NBS). It also explained that from April 2026, the survey adopted a five-point weighted diffusion index, replacing the previous three-point scale to provide a more detailed assessment of business sentiment and macroeconomic conditions.
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