The Central Bank of Nigeria (CBN) has projected a period of relative stability for the national currency, the naira, extending into the first half of 2026. This optimistic outlook comes alongside forecasts for a decline in borrowing costs, offering a potential respite for businesses grappling with high financing expenses.
Business Survey Points to Strengthening Naira and Cheaper Credit
These projections are detailed in the CBN's latest monthly Business Expectations Survey (BES), which captured the sentiments of approximately 1,900 businesses across Nigeria. According to the report, respondents anticipate the naira will strengthen against the US dollar over the next six months, with the confidence index rising from 28.8 points to 42.2 points through May 2026.
The report states: "Respondents expect the naira to US dollar exchange rate to steadily appreciate across the review periods, as indicated by the positive indices. They also anticipate a continuous positive outlook for the borrowing rate during the same periods."
This expected stability would extend a period of calm for the currency, which has been unusually steady in recent months following a turbulent 2024 where it lost about 41% of its value after the exchange rate unification policy.
Inflation Trend Paves Way for Potential Rate Cuts
Parallel to the currency forecast, the survey indicates that borrowing rates are set to ease. The index for borrowing costs is projected to fall from 15.4 points to 11.7 points over the same six-month period. This anticipated decline is closely linked to the slowing trend in inflation, which has been the primary driver of the CBN's tight monetary policy.
To combat inflation, the central bank has maintained its benchmark Monetary Policy Rate (MPR) at 27% for most of the year, implementing only a marginal 50 basis point cut in late 2025. With inflation projected to drop into single digits in 2026 from 14.45% in November 2025, analysts believe policymakers will have more room to ease rates further, thereby boosting credit access for the private sector.
Persistent Business Constraints: Insecurity and Taxes Top the List
Despite the positive financial outlook, the BES highlights that Nigerian businesses continue to face severe operational headwinds. The survey identified the top five constraints for businesses in November 2025.
The major challenges include:
- Insecurity (70.1 index score)
- High and Multiple Taxes (69.7 index score)
- Insufficient Power Supply (69.3 index score)
- High Interest Rate (67.2 index score)
- Financial Problems (64.7 index score)
Notably, issues like poor infrastructure and an unfavourable political climate ranked lower, suggesting that immediate financial and security pressures are of greater concern to firms than broader political risks.
The CBN's report provides a mixed but insightful picture: while the macroeconomic indicators for the naira and borrowing costs are pointing towards improvement, the day-to-day environment for conducting business in Nigeria remains fraught with significant, unresolved challenges.
