Nigerian firms are still projecting a positive economic outlook despite facing increasing operational pressures that have slightly weakened business sentiment.
Findings from the latest Business Expectations Survey (BES) by the Central Bank of Nigeria (CBN) showed that the Business Confidence Index (BCI) dropped to 7.2 points in June 2026, compared with 7.9 points recorded in May.
The decline reflects a moderation in business optimism as companies continue to grapple with rising operating costs, financing difficulties and wider macroeconomic uncertainties. However, businesses in the formal sector remained confident about future economic prospects, with expectations supported by ongoing government reforms, economic diversification initiatives and anticipated improvements in economic conditions in the coming months.
According to the CBN’s Statistics Department, the positive reading reflects continued confidence among businesses despite challenges affecting their operations.
“The Business Confidence Index stood at 7.2 points in June 2026, signalling continued optimistic sentiment among formal businesses,” the report stated.
The survey noted that businesses expect economic conditions to improve gradually, projecting that the confidence index could rise to 17.6 points in July, 24.1 points over the next three months and 30.9 points within six months.
Economic Reforms Support Business Optimism
The report identified economic diversification programmes and expansionary fiscal policies as the leading factors supporting business confidence during the period.
About 38.3 per cent of respondents said structural economic diversification was the major factor boosting optimism, while 16.2 per cent attributed improved sentiment to government fiscal measures.
However, businesses continued to highlight persistent challenges, particularly unreliable energy supply and global economic uncertainties.
Energy-related constraints accounted for 23.4 per cent of factors weakening business confidence, while 16.5 per cent of respondents cited geopolitical risks as a major concern affecting their outlook.
Mining Sector Records Highest Confidence
The Mining and Quarrying sector emerged as the most optimistic segment of the economy, recording a confidence score of 42.9 points.
The sector also recorded the highest Average Capacity Utilisation (ACU) rate at 58.5 per cent, with 84.6 per cent of surveyed firms indicating plans to expand their operations in the near term.
Agriculture also recorded improved sentiment, with its confidence index rising to 12.2 points in June from 9.4 points in May.
Meanwhile, confidence in the Industrial sector moderated to 10.9 points from 12.5 points, while the Services sector experienced a sharper decline, falling to 2.9 points.
Across the economy, average capacity utilisation remained relatively stable, declining slightly to 55.3 per cent from 55.9 per cent in the previous month.
Firms Expect Growth but Remain Cautious on Hiring
Despite expectations of stronger business activity and increased customer orders, companies remained cautious about expanding their workforce.
The survey showed that businesses expect activity levels to increase in July, with the Business Activity Index projected at 13.3 points, while the Order Volume Index stood at 12.8 points.
However, the Employment Outlook Index remained negative at -8.3 points, indicating that many firms are focusing on controlling costs and preserving capital rather than increasing staff numbers.
The CBN said high operating costs, limited access to affordable financing and economic uncertainties are among the factors discouraging businesses from expanding their workforce.
Regional Confidence Shows Uneven Recovery
The survey revealed significant differences in business sentiment across Nigeria’s geopolitical zones.
The North-East recorded the highest level of optimism, with a confidence score of 29.5 points, followed by the North-West at 19.8 points.
However, sentiment remained weak in some southern regions, with the South-South recording a confidence index of -7.9 points and the South-East posting -9.0 points.
On exchange rate expectations, businesses expressed confidence that the naira could experience gradual appreciation against the United States dollar over the medium term.
Despite this optimism, access to finance remains a major challenge, with respondents indicating that borrowing conditions remain tight.
The survey showed that private sector borrowing indices ranged between 20 and 22 points, suggesting that high lending rates and restrictive credit conditions may continue to limit expansion plans throughout 2026.
Rising Costs Continue to Limit Business Growth
The June survey followed an improvement recorded in May, when business confidence increased to 7.9 points from 3.9 points in April.
The CBN attributed recent improvements in sentiment to stronger confidence in government policies and progress in economic diversification. However, it warned that energy supply challenges, financing costs and global uncertainties remain major risks to business performance.
Although Nigerian firms remain generally optimistic about future economic conditions, the latest findings suggest that rising operational expenses and structural challenges are slowing the pace of recovery and making businesses more cautious about investment and employment decisions.