Businesses Hope on Naira Rise Despite High Interest Rate
Businesses expect the naira to strengthen while confidence improves, although high interest rates and operating costs remain significant concerns.
Businesses are increasingly optimistic that the naira will strengthen against the United States dollar over the coming months despite expectations that borrowing costs will remain elevated, according to the Central Bank of Nigeria’s June 2026 Business Expectations Survey.
The survey showed respondents expect a gradual appreciation of the naira in the current month, next month, the next three months and the next six months.
At the same time, businesses anticipate interest rates will remain high, with borrowing costs expected to increase moderately over the near to medium term.
Overall business sentiment remained positive in June, with the Business Confidence Index standing at 7.2 points. Confidence is projected to strengthen to 17.6 points next month, 24.1 points over the next three months and 30.9 points over the next six months, reflecting expectations of improved economic activity.
The report attributed the positive outlook largely to economic diversification and expansionary fiscal policies, although businesses continued to cite energy challenges and geopolitical uncertainties as factors weighing on confidence.
Across sectors, Mining and Quarrying posted the strongest confidence reading at 42.9 points, followed by Agriculture at 32.3 points and Construction at 32.0 points.
Businesses also expect activity to improve in July, September and December 2026, while the volume of business activity and order inflows are projected to remain on an upward trajectory.
Despite the upbeat outlook, firms remain cautious about hiring. While many businesses plan to expand operations, employment expectations for the near term were generally subdued across sectors.
The survey identified high or multiple taxation, insecurity and elevated interest rates as the three biggest constraints facing businesses, followed by an unfavourable political climate, high bank charges and poor infrastructure.
Average capacity utilisation eased slightly to 55.3 per cent in June from 55.9 per cent in May.
