Nigeria’s Business Confidence Rebound Exposes A Persistent Cost, Security TrapB

By Jennete Ugo Anya 

Business confidence among Nigeria’s formal-sector enterprises strengthened sharply in August 2026, with the Central Bank of Nigeria’s (CBN) latest Business Expectations Survey showing a broad-based improvement in sentiment. The rebound, however, comes alongside persistent concerns over taxation, insecurity and expensive credit.

DEVELOPMENT:

The CBN’s August 2026 Business Expectations Survey, released by its Statistics Department, Economic Policy Directorate, showed the Business Confidence Index (BCI) rising to 14.8 points from 5.7 points in July.

The improvement was driven largely by stronger demand, economic diversification and monetary policy, which recorded indices of 25.9 percent, 18.3 percent and 14.2 percent respectively. Businesses also maintained a positive outlook across Industry, Services and Agriculture.

Industry confidence rose from 11.5 to 17.1 points, Services from 3.6 to 13.3 points, and Agriculture from 3.4 to 13.9 points.

DATA:

The optimism extends into the medium term, with the BCI projected at 23.6 points in September, 30.1 points in November and 36.1 points by February 2027.

Electricity, Gas and Water Supply recorded the highest confidence at 50.0 points, while Construction posted the strongest September expansion outlook at 73.9 points. Mining and Quarrying recorded the highest capacity utilisation at 58.1 percent.

But the constraints remain severe. Multiple taxation ranked first at 67.8 points, followed by insecurity at 66.9 points and high interest rates at 63.5 points. High bank charges stood at 61.1 points and competition at 59.5 points.

SIGNIFICANCE:

The survey presents a mixed picture of Nigeria’s operating environment. Businesses are becoming more optimistic about demand and economic activity, but the cost of operating remains a major drag on that confidence.

CBN maintained its benchmark interest rate at 26.5 percent in July, while headline inflation eased to 15.43 percent. Businesses nevertheless expect borrowing costs to remain elevated, with borrowing-rate indices staying within the 18-19 point range.

NEXT MOVE:

The critical test is whether improving sentiment translates into stronger investment, capacity utilisation and employment. Employment expectations remained subdued across most sectors, with Electricity, Gas and Water Supply recording a neutral hiring sentiment of 0.0 index point.

The CBN also expects measured naira appreciation against the US dollar across the review periods.

OUR LENS:

Nigeria’s business confidence is recovering faster than the business environment is being repaired. The optimism is significant, but the 67.8-point taxation constraint, 66.9-point insecurity index and 63.5-point interest-rate burden show that companies remain trapped between improving demand and structurally high operating costs.

The CBN’s April 2026 shift from a three-point to a five-point weighted diffusion scale should also be kept in view, as it allows more nuanced measurement of business sentiment. The real policy challenge is now to convert confidence into investment and jobs by removing the constraints businesses continue to identify as their biggest obstacles.

Jennete Ugo Anya is a journalist and researcher with interests across Nigeria’s economy, public policy, business, development and strategic communications.