Survey: Firms Expect Higher Borrowing Costs Amid Growth Optimism

Nume Ekeghe

Businesses across Nigeria are betting on a stronger naira in the coming months, but many also see borrowing costs heading higher, according to the latest Business Expectations Survey released by the Central Bank of Nigeria (CBN).

The survey’s positive outlook on the naira aligns with recent market performance, as the currency closed the week stronger against the US dollar. After months of volatility, the naira firmed up at both the official and parallel markets, reflecting improved FX liquidity and cautious optimism among investors, a development that appears to support business expectations of further appreciation in the coming months.

The survey shows that firms remain generally optimistic about the macroeconomic outlook, with many expecting an improvement in the value of the naira against the US dollar across the review periods. “Respondents expect the naira to US dollar exchange rate to appreciate across the review periods, as indicated by a positive index,” the report states.

At the same time, however, the report said most businesses anticipate that borrowing rates will rise highlighting concerns about access to affordable credit, even as they prepare for expansion.

The report noted that outlooks on total orders, business activity, and financial conditions were positive for the review month. Firms also said they expect business activity to improve further in June, August, and November 2025.

Sector by sector, the survey paints a picture of cautious growth adding,“The Agriculture sector led the way in terms of confidence and current capacity utilisation. Meanwhile, firms in the Mining and Quarrying and the Electricity, Gas and Water Supply sectors reported the strongest expansion plans for June. The Construction sector, on its part, showed the highest employment prospects, with businesses saying they expect to hire more workers in the coming month.

“Still, for all the optimism, several challenges continue to weigh heavily on business decisions. Insecurity was flagged as the biggest constraint by 74.5 percent of respondents echoing a long-standing concern across industries. High interest rates, 73.9 per cent and high taxes 73.4 percent followed closely behind, showing that financial pressures remain a key hurdle for businesses looking to grow.

“Other concerns such as poor infrastructure 61.5 per cent and the political climate 61.2 per cent also featured among the top 10 issues, though they ranked slightly lower suggesting that businesses are more troubled by economic risks than structural or political ones at the moment.”