Nigerian businesses remained cautious about current economic conditions in July as high taxation, insecurity and elevated interest rates continued to constrain operations, even as firms expressed stronger optimism about the months ahead.
The Central Bank of Nigeria’s July 2026 Business Expectations Survey showed that the Business Confidence Index stood at 5.7 points during the month, reflecting weak sentiment among businesses across the country.
The survey, conducted from July 6 to 10 among 1,900 businesses across the industry, services and agriculture sectors, showed that high or multiple taxation was the biggest constraint faced by firms, with an index of 70.8.
Insecurity ranked second at 69.7, while high interest rates followed at 66.3. Unfavourable political conditions and high bank charges also remained significant pressures on businesses.
The findings highlight the persistent cost and operating pressures facing Nigerian companies despite signs of improving economic activity.
Inflation was the biggest factor shaping firms’ assessment of the macroeconomic environment, accounting for 27.7 percent of responses. Energy-related challenges accounted for 23.4 percent, while insecurity contributed 22.4 percent and elevated geopolitical uncertainties 16.5 percent.
Despite these challenges, businesses remained more optimistic about their future prospects. The CBN survey showed that the national Business Confidence Index is expected to rise to 20.0 points in August, 27.8 points over the next three months and 35.8 points over the next six months.
Businesses cited increased demand, economic diversification and access to finance as the leading factors supporting positive sentiment, accounting for 22.3 percent, 21.4 percent and 15.0 percent respectively.
The regional data, however, showed a wide divergence in business sentiment. The North-West recorded the strongest current-month confidence at 16.0 points, followed by the North-East at 15.1 points and North-Central at 10.2 points.
The South-West recorded 6.9 points, while sentiment was negative in the South-East and South-South, at -9.3 and -9.8 points respectively.
The CBN said expectations were positive across all regions for the following month and remained positive over the three- and six-month horizons, with the North-East recording the strongest forward outlook.
The sectoral picture was also mixed. Industry confidence rose to 11.5 points from 10.5 points, while services increased to 3.6 points from 2.9 points. Agriculture, however, fell sharply to 3.4 points from 12.2 points.
Over the next six months, industry is expected to record the highest confidence at 40.2 points, followed by services at 34.6 points and agriculture at 31.6 points.
Meanwhile, average capacity utilisation edged up to 55.9 percent in July from 55.3 percent in June, driven mainly by the mining and quarrying sector.
Mining and quarrying recorded the highest capacity utilisation at 67.5 percent, followed by manufacturing at 55.9 percent, agriculture at 54.8 percent and construction at 47.4 percent.
The survey also showed that businesses expect activity to strengthen, with the Volume of Total Order Index recording the highest reading at 16.9 points, followed by the Volume of Business Activity Index at 16.1 points.
However, the Financial Condition Index stood at 12.9 points and the Credit Access Index at 9.5 points, suggesting that financing conditions remain a constraint on the ability of firms to expand.
The July survey therefore points to a business sector caught between weak current confidence and improving expectations, with the pace of recovery likely to depend on how quickly operating costs, insecurity.
SOURCE: Businessday
