Business confidence among Nigerian firms weakened slightly in June as rising operating costs and persistent macroeconomic pressures moderated optimism, although sentiment remained positive, the Central Bank of Nigeria(CBN) said.
The apex bank’s latest Business Expectations Survey (BES) showed that the Business Confidence Index (CI)declined to 7.2 points in June from 7.9 points in May, reflecting a modest slowdown in business optimism while remaining firmly in positive territory.
The CBN said businesses in the formal sector remained broadly optimistic, supported by ongoing economic reforms and efforts to diversify the economy, despite continued pressure from high operating costs and other business challenges.
The survey showed businesses expect conditions to improve in the coming months, with the BCI projected to rise to 17.6 points in July, 24.1 points over the next three months and 30.9 points within six months, driven largely by expectations of sustained structural reforms and supportive fiscal policies.
Economic diversification remained the biggest source of optimism, cited by 38.3 per cent of respondents, while 16.2 per cent attributed their positive outlook to government fiscal measures. However, 23.4 per cent of businesses identified inadequate energy supply as the main factor weighing on confidence, while 16.5 per cent pointed to global geopolitical tensions.
A sectoral breakdown showed that mining and quarrying remained the most optimistic sector, posting a confidence index of 42.9 points. The sector also recorded the highest average capacity utilisation rate at 58.5 per cent, while 84.6 per cent of firms indicated plans to expand operations.
Agriculture recorded improved sentiment, with its confidence index rising to 12.2 points from 9.4 points in May. The Industrial sector, however, eased to 10.9 points from 12.5 points, while the Services sector posted the sharpest decline, falling to 2.9 points.
Average capacity utilisation across sectors declined marginally to 55.3 per cent in June from 55.9 per cent in the preceding month.
Despite expectations of stronger business activity and higher order volumes in July, firms remained cautious about expanding their workforce. The Business Activity Index and Order Volume Index for July stood at 13.3 points and 12.8 points, respectively, while the Employment Outlook Index remained negative at -8.3 points, suggesting businesses are prioritising cost management amid tight financing conditions.
The survey also highlighted disparities in business sentiment across the country’s geopolitical zones. The North-East recorded the highest confidence level at 29.5 points, followed by the North-West at 19.8 points.
In contrast, sentiment remained weak in parts of southern Nigeria, with the South-South recording a confidence index of -7.9 points and the South-East posting -9.0 points.
On the exchange rate, respondents expressed cautious optimism that the naira would appreciate gradually against the United States dollar over the medium term.
However, access to credit to the private sector remained constrained, with borrowing indices ranging between 20 and 22 points, indicating that elevated lending rates could continue to limit investment and business expansion through the rest of 2026.
The June reading followed an improvement in May, when the Business Confidence Index rose to 7.9 points from 3.9 points in April. The CBN attributed the recent recovery in sentiment to improving perceptions of government policies and economic diversification efforts, although it noted that energy costs, financing constraints and global uncertainty remain significant risks.
The latest survey suggests that while Nigerian businesses remain optimistic about economic prospects in the second half of the year, persistent cost pressures and structural challenges continue to temper confidence.
