KEY POINTS

• Nigerian firms expect a marginal decline in loan borrowing costs over the next three months, even though rates stayed elevated in July.
• The Business Confidence Index held at 5.7 points, with demand, diversification and access to finance driving optimism.
• High taxation, insecurity and high interest rates ranked as the top three constraints on business.

Nigerian firms expect borrowing costs to decline over the next three months, even though they saw lending rates stay high through July, according to the Central Bank of Nigeria’s latest Business Expectation Survey Report.

Although businesses still describe borrowing rates as elevated, the survey points to a modest easing ahead. Specifically, the central bank said the borrowing rate indices held steady at roughly 18 to 19 points, and that stability signals a marginal decrease in loan costs over the near to medium term. As a result, many firms now plan around gradually cheaper credit, even as they wait for clearer proof that rates have turned.

Confidence holds despite lingering pressures

Overall, sentiment among formal businesses stayed upbeat. The Business Confidence Index reached 5.7 points, which reflects continued optimism about the macro economy. Moreover, respondents pointed to increased demand at 22.3 percent, economic diversification at 21.4 percent and access to finance at 15 percent as the main drivers of that positive outlook.

However, several worries tempered the mood. Inflation weighed most heavily at 27.7 percent, while energy-related challenges followed at 23.4 percent and insecurity trailed closely at 22.4 percent. In addition, elevated geopolitical uncertainties troubled 16.5 percent of respondents. Still, the central bank stressed that the six-month outlook remains strong, since every sector reflected positive sentiment across the review period. Consequently, the survey suggests that firms weigh real cost pressures against a broadly hopeful reading of the months ahead.

Taxes and rates top the list of constraints

During the review period, businesses ranked high and multiple taxation as their biggest obstacle at 70.8 index points. Insecurity followed at 69.7, and high interest rates came third at 66.3. Furthermore, firms flagged an unfavorable political climate at 62.2 and high bank charges at 62.0.

Meanwhile, competition at 61.1 and unclear economic laws at 58.4 ranked lower, yet they remained significant. Likewise, financial constraints at 56.6 and poor infrastructure at 55.1 sat at the bottom of the top ten. Despite these hurdles, the electricity, water and gas sector posted the strongest expansion outlook at 85.7 index points. Nonetheless, employers stayed cautious about hiring in August 2026, and only the mining and quarrying sector offered a notably optimistic outlook. Overall, the report shows firms that expect cheaper credit soon, yet still push for lower taxes, steadier security and calmer rates.