High interest rates have emerged as the foremost challenge for Nigerian businesses, surpassing insecurity and power shortages, according to the Central Bank of Nigeria’s (CBN) June 2025 Business Expectations Survey (BES). Conducted from June 16 to 20, the survey of 1,900 firms across agriculture, industry, and services sectors assigned high interest rates a constraint index score of 75.6, followed closely by insecurity at 75.2 and insufficient power supply at 74.3.
The findings highlight growing frustration over the cost of borrowing, driven by the CBN’s high benchmark interest rates aimed at curbing inflation and stabilizing the naira. For many businesses, particularly small and medium enterprises, these rates have led to costly credit and strained cash flows, overshadowing longstanding issues like insecurity and unreliable electricity.
Other significant obstacles include high bank charges (73.2), excessive taxes (68.9), an unfavorable economic climate (68.7), and unclear economic laws (67.4). Infrastructure deficits (62.4) and political instability (62.5) ranked lower, indicating that financial and economic pressures are currently more pressing than political concerns.
Despite these challenges, businesses remain cautiously optimistic, with the Business Confidence Index (BCI) at 20.7 in June, projected to climb to 41.3 over the next six months. This optimism is driven by expectations of increased business activity and better operating conditions. However, confidence varies regionally, with the South-East scoring the lowest at 4.4 due to the severe impact of high interest rates, while the North-East showed the highest confidence at 37.1.
The survey also noted expectations of naira appreciation in the coming months, though businesses anticipate further rises in borrowing costs. As the CBN’s Monetary Policy Committee meets, analysts are divided. Some expect the Monetary Policy Rate to remain at 27.5% to balance price stability and growth, while others predict a slight cut to 27.25% with adjustments to the asymmetric corridor to signal a cautious policy shift.
The report underscores the delicate balance the CBN faces in addressing economic pressures while fostering business growth, with firms urging measures to ease financial constraints and support operational stability.
