Firms Expect Borrowing Costs to Decline in 3 Months

Nigerian firms anticipate a decline in borrowing costs for bank loans within the next three months, even as rates remained high in July. This outlook is detailed in the Central Bank of Nigeria's (CBN) latest Business Expectation Survey Report.

The report indicates that respondents expect borrowing rates to stay elevated in the near to medium term, with consistently positive borrowing rate indices fluctuating around 18-19 points, suggesting a marginal decrease is anticipated. The Business Confidence Index stands at 5.7 points, reflecting continued optimism among formal businesses regarding the macroeconomy.

This positive sentiment is largely supported by increased demand (22.3 percent), economic diversification (21.4 percent), and improved access to finance (15 percent). However, more cautious views are driven by persistent inflation (27.7 percent), insecurity (22.4 percent), ongoing energy challenges (23.4 percent), and elevated geopolitical uncertainties (16.5 percent).

Looking ahead to the next six months, the CBN projects a strong outlook, with confidence indices across all sectors showing positive sentiment. Despite this, businesses identified high/multiple taxation (70.8 percent), insecurity (69.7 percent), and high interest rates (66.3 percent) as the primary constraints. Other significant challenges include an unfavorable political climate (62.2 percent) and high bank charges (62.0 percent).

The electricity, water, and gas sector shows the highest expansion outlook at 85.7 index points. Employment expectations for August 2026 are cautious across most sectors, though the Mining & Quarrying sector has the most optimistic hiring outlook.