Business confidence rises sharply as taxes, insecurity remain major concerns in August – CBN Survey

Business confidence among formal-sector enterprises in Nigeria strengthened in August 2026, with the Business Confidence Index (BCI) rising to 14.8 points from 5.7 points in July, a Central Bank of Nigeria (CBN) survey has shown.

The improvement indicates stronger positive sentiment among businesses, according to the CBN’s August 2026 Business Expectations Survey (BES), released by the bank’s Statistics Department, Economic Policy Directorate.

The survey said respondents’ positive sentiment was largely driven by increased demand, economic diversification and the monetary policy stance, which recorded indices of 25.9 per cent, 18.3 per cent and 14.2 per cent, respectively.

Businesses also expressed optimism about the outlook for the coming months.

According to the survey, respondents expect the business confidence index to rise to 23.6 points in September and 30.1 points in November 2026, with further improvement projected to 36.1 points by February 2027.

The apex bank said the overall business outlook remained positive across all sectors in August.

Sectoral outlook

The Industry sector recorded a marked improvement in confidence, with its index increasing from 11.5 points in July to 17.1 points in August.

The Services sector also strengthened from 3.6 points to 13.3 points, while the Agriculture sector rose from 3.4 points in July to 13.9 points in August.

The survey said the outlook over the next six months remained robust, with confidence indices across all three sectors reflecting sustained positive sentiment.

At the sector level, the Electricity, Gas and Water Supply sector recorded the highest business confidence at 50.0 points.

The Construction sector, meanwhile, recorded the highest outlook for expansion in September, with an index of 73.9 points.

The Mining and Quarrying sector recorded the highest capacity utilisation during the review month at 58.1 per cent.

Taxes, insecurity remain major concerns

Despite improved business sentiment, respondents continued to identify taxation, insecurity, and borrowing costs as major constraints to business operations.

High or multiple taxation was ranked the top business constraint in August, with an index of 67.8 points.

It was followed by insecurity at 66.9 points and high interest rates at 63.5 points.

Other major constraints identified by businesses were high bank charges, with 61.1 points, and competition, with 59.5 points.

Unclear economic laws and unfavourable economic climate each recorded 57.7 points, while unfavourable political climate and poor infrastructure recorded 56.3 and 55.7 points, respectively.

The survey therefore showed that multiple taxation, insecurity and high interest rates remained the prevailing operational challenges facing businesses.

CBN said respondents expected a measured appreciation of the naira against the US dollar across the review periods, with the reported indices remaining in positive territory.

Businesses, however, expected borrowing rates to remain elevated over the same periods.

The borrowing-rate indices remained within the 18-19 point range, suggesting expectations of a marginal decline in borrowing costs over the near to medium term.

Meanwhile, CBN retained the benchmark interest rate at 26.5 per cent in July, maintaining a cautious monetary policy stance amid inflationary pressures, even as Nigeria’s headline inflation eased to 15.43 per cent during the month.

The survey also found that the volume of business activity is expected to improve in September and November 2026, with further improvement anticipated in February 2027.

Employment expectations for September remained subdued across most sectors as the Electricity, Gas and Water Supply sector recorded a neutral hiring sentiment at 0.0 index point.

Regional Outlook

The macroeconomic outlook for August showed differences in sentiment across regions, according to the CBN data.

In the survey, respondents in the northern part of the country reported stronger confidence levels than those in the southern part.

However, businesses across all sectors reported optimism regarding their own operations during the review month.

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The survey said all sectors also indicated optimism about the macroeconomy.

The Business Expectations Survey is a monthly survey of leading firms drawn from the Business Establishment frame of the CBN and the National Bureau of Statistics.

The survey provides an indication of business sentiment regarding overall economic activity.

The CBN said its BES methodology was enhanced in April 2026, when the weighted diffusion index was changed from the three-point Likert scale previously used to a five-point scale.

According to the bank, the change allows for more nuanced reporting of respondents’ sentiments.