Nigerian Businesses Cautious Amid Optimism as Interest Rate Hike Looms — CBN Survey
A recent survey by the Central Bank of Nigeria (CBN) reveals a mixed economic sentiment among businesses across the country, as they balance cautious optimism over the naira’s stability with growing concerns about rising borrowing costs. The May 2025 Business Expectations Survey (BES), conducted among 1,900 firms nationwide, indicates that many businesses foresee a modest appreciation of the naira against the US dollar, driven by foreign exchange reforms and improved oil revenues.
Despite the positive currency outlook, the majority of respondents expressed serious concerns over increasing interest rates, which they believe could hamper their ability to expand, invest, or hire. Although the net confidence index remained positive, companies are devising survival strategies to cope with Nigeria’s challenging business climate. The sentiment suggests a fragile balance between hope for economic stability and fear of mounting financial pressure.
Businesses across all surveyed sectors — including manufacturing, agriculture, and services — reported positive expectations for growth and employment. However, these hopes are tempered by recurring issues such as insecurity, excessive taxation, and especially high interest rates. These operational challenges, according to the report, are significant enough to threaten profitability and long-term investment planning.
Experts like Dr. Tayo Oyekan of Lagos Business School warn that the business outlook could deteriorate quickly if inflation, currently at 23.71%, worsens or if the naira’s gains prove short-lived. The tight monetary policy pursued by the CBN to combat inflation is making credit more expensive, which, while stabilizing prices, could choke production and expansion, particularly for capital-intensive sectors.
Business leaders such as agro-entrepreneur Temitayo Adebayo and finance expert David Adonri emphasized the dilemma: a stronger naira lowers import costs, but double-digit interest rates—sometimes exceeding 30%—make financing unaffordable. While the CBN Governor, Olayemi Cardoso, insists the economy is being restructured for sustainable growth, many firms remain wary that without complementary policies to ease credit and support production, economic recovery could stall.