High taxation, insecurity, high interest rates top constraints facing Nigerian businesses

Businesses in Nigeria identified high or multiple taxation, insecurity and high interest rates as the top three constraints they faced in July, according to the latest Business Expectations Survey (BES) released by the Central Bank of Nigeria (CBN).

In the July BES report, the apex bank said businesses remained optimistic despite perceived macroeconomic challenges.

Effective April 2026, the CBN enhanced the BES methodology by changing the weighted diffusion index from the previously used three-point Likert scale to a five-point scale.

The July survey was conducted from 6-10 July, with a sample size of 1,900 business enterprises across Nigeria.

CBN said the survey achieved a response rate of 99.9 per cent, covering three key sectors: Industry, Services, and Agriculture.

Findings

According to the survey, businesses ranked high or multiple taxation (70.8 points), insecurity (69.7 points), and high interest rates (66.3 points) as the top three constraints during the month. Unfavourable political climate (62.2 points) and high bank charges (62.0 points) were also identified as major challenges.

Competition (61.1 points) and unclear economic laws (58.4 points) ranked lower but remained significant constraints, while financial constraints (56.6 points) and poor infrastructure (55.1 points) recorded the lowest scores among the listed challenges.

Despite these constraints, the Business Confidence Index (BCI) remained positive in July, reflecting sustained optimism across all review horizons.

The CBN said respondents’ positive sentiment was largely driven by increased demand (22.3 per cent), economic diversification (21.4 per cent) and improved access to finance (15.0 per cent).

However, more cautious views were attributed to inflation (27.7 per cent), ongoing energy-related challenges (23.4 per cent), insecurity (22.4 per cent) and elevated geopolitical uncertainties (16.5 per cent).

Sector outlook

According to the survey, all sectors expressed optimism about the macroeconomy, with the electricity, gas and water sector recording the highest Business Confidence Index of 59.4 points and the strongest expansion outlook for August 2026.

Respondents also expect the naira to appreciate in the review period, while the mining and quarrying sector recorded the highest capacity utilisation.

The survey further showed that respondents expect borrowing rates to remain elevated across the review horizons, as reflected by the consistently positive borrowing rate indices.

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Sectoral analysis indicated that the electricity, gas and water sector posted the strongest expansion outlook, with an index of 85.7 points.

The macroeconomic outlook also revealed regional differences in sentiment, with respondents in northern Nigeria expressing stronger confidence than their counterparts in the South.

All regions reported positive expectations for next month. Over the three- and six-month horizons, optimism remained positive nationwide, with the North-East recording the highest level of confidence.