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By Chinwendu Obienyi
Insecurity, multiple taxation, high interest rates and other cost-related pressures remain the biggest challenges confronting businesses in Nigeria, despite growing optimism about the country’s economic outlook, according to the Central Bank of Nigeria’s (CBN) May 2026 Business Expectations Survey (BES).
The survey revealed that insecurity ranked as the most significant constraint facing firms, scoring 72.9 points on the index of business challenges. This was followed by high and multiple taxes at 70.3 points, high interest rates at 67.7 points, an unfavourable political climate at 64.2 points, and high bank charges at 64.1 points.
This findings underscore the difficult operating environment businesses continue to navigate, even as confidence in macroeconomic conditions improves. According to the survey, risks and cost pressures remain dominant concerns for firms across the agriculture, industry and services sectors.
Other notable constraints identified by respondents include energy-related challenges, financial difficulties and poor infrastructure. Although financial problems and inadequate infrastructure ranked lower among the top ten challenges, with scores of 59.7 and 58.2 points respectively, they continue to pose significant hurdles to business operations and expansion.
The survey, which covered 1,900 business enterprises across Nigeria and achieved a response rate of 99.5 per cent, showed that businesses maintained a positive outlook on the economy during the review period. The Business Confidence Index (BCI) stood at 7.9 points in May 2026, reflecting improved sentiment compared with the previous month.
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According to the CBN, the improvement in business confidence was supported largely by perceived easing of governance and policy-related concerns, as well as continued progress in economic diversification efforts. Respondents cited governance and policy improvements and economic diversification as key factors strengthening confidence in the macroeconomic environment.
Sectoral analysis showed that optimism was broad-based across agriculture, industry and services. Confidence in the agriculture sector rose sharply from 2.7 points in April to 9.4 points in May, while the services sector improved from 1.5 points to 4.6 points. The industry sector recorded the strongest confidence level, increasing from 8.8 points to 12.5 points over the same period.
Despite the positive outlook, businesses remain cautious about the impact of persistent structural challenges on their operations. High borrowing costs continue to affect access to credit and investment decisions, while multiple taxes and regulatory burdens add to operational expenses. Insecurity also remains a major concern, affecting supply chains, logistics, workforce mobility and overall business confidence.
Looking ahead, firms expect business activity to improve further in June, August and November 2026. Respondents also anticipate a gradual appreciation of the naira against the United States dollar over the review horizon.
However, borrowing costs are expected to remain elevated, suggesting that financing conditions may continue to constrain business growth.
The survey findings highlight a business community that is increasingly optimistic about economic prospects but remains burdened by longstanding challenges. Addressing insecurity, reducing the tax burden and creating a more supportive financing environment are likely to be critical in sustaining business confidence and translating optimism into stronger investment, employment and economic growth.
