Firms expect borrowing cost to decline in 3 months
Firms Anticipate Decline in Bank Loan Borrowing Costs
By Elizabeth Adegbesan
Businesses in Nigeria expect a decrease in borrowing costs for bank loans over the next three months, despite experiencing elevated rates in July, according to the Central Bank of Nigeria’s (CBN) latest Business Expectations Survey Report.
The report indicates that while respondents foresee borrowing rates remaining high during the same period, the stable borrowing rate indices, fluctuating between 18 and 19 points, suggest a marginal decrease may be on the horizon for the near- to medium-term.
The Business Confidence Index stood at 5.7 points, reflecting ongoing optimism among formal businesses regarding the macroeconomic landscape. CBN officials noted that this positive sentiment is largely attributed to increased demand (22.3%), economic diversification (21.4%), and improved access to finance (15%).
Despite the overall optimism, concerns persist, with inflation (27.7%), insecurity (22.4%), ongoing energy challenges (23.4%), and heightened geopolitical uncertainties (16.5%) influencing more guarded sentiments.
Looking ahead, the CBN maintains a strong outlook for the next six months, with confidence indices across all sectors demonstrating positive trends during the review period. Businesses identified high or multiple taxation (70.8%), insecurity (69.7%), and high interest rates (66.3%) as the top three constraints affecting operations. They also cited an unfavorable political climate (62.2%) and high bank charges (62.0%) as significant barriers.
While competition (61.1%) and unclear economic laws (58.4%) were noted as important issues, they ranked lower on the list. Financial constraints (56.6%) and poor infrastructure (55.1%) appeared at the bottom of the top ten constraints but remain notable concerns for businesses.
In terms of expansion, the electricity, water, and gas sector showed the strongest outlook, with an index score of 85.7 points. However, employment expectations for August 2026 remain cautious across sectors, with the Mining and Quarrying sector exhibiting the most optimistic hiring prospects.
