A new survey by the Central Bank of Nigeria (CBN) shows that business confidence in Nigeria improved in May 2026, with firms across all sectors reporting a more positive outlook on the economy. The Business Expectations Survey, released on the CBN's website, indicates broad-based optimism across agriculture, industry, and services, with companies expecting stronger business activity over the coming months and a gradual appreciation of the naira.
Improved Sentiment Across All Sectors
The survey, conducted with 1,900 firms and a 99.5% response rate, is jointly compiled with the National Bureau of Statistics. All major sectors maintained positive expectations for current and future macroeconomic conditions. The industrial sector recorded a confidence index of 12.5 points, agriculture 9.4 points, and services 4.6 points, reflecting a steady improvement compared with April.
Employment Outlook Remains Negative
Despite the improved optimism, employment expectations remained negative across all sectors, reflecting lingering caution in hiring decisions. Firms expressed optimism over business activity for June, August, and November 2026, with confidence strengthening further over longer-term horizons. However, employment sentiment remained weak, with companies across sectors indicating plans to slow or reduce hiring in the near term despite improving business conditions.
Mining Sector Leads Expansion Outlook
Among all sectors, Mining & Quarrying recorded the strongest expansion outlook at 69.2 points, followed by construction and agriculture. The sector also posted the highest capacity utilisation levels during the review period. Overall average capacity utilisation stood at 55.9%, slightly below 56.0% in the previous month, suggesting marginal stability in production activity.
Naira Expectations Improve, Borrowing Costs Stay High
Respondents expect the naira to appreciate against the US dollar over the short and medium term, reflecting improved market sentiment and expectations of policy stability. However, borrowing costs are expected to remain elevated across all time horizons, underscoring persistent tight financial conditions for businesses.
Key Constraints: Insecurity, Taxes, and High Interest Rates
Despite improved optimism, firms identified insecurity (72.9), multiple taxation (70.3), high interest rates (67.7), unfavourable political climate (64.2), and high bank charges (64.1) as the most severe operational challenges. Other constraints included financial pressure, weak infrastructure, and access to credit, highlighting structural bottlenecks affecting private sector growth.
Regional Divergence in Confidence
The survey revealed regional disparities in sentiment. The North-East recorded the strongest optimism, while parts of the South-East and South-South showed weaker or negative short-term expectations. Over a six-month horizon, however, optimism was broadly positive across all geopolitical zones, indicating expectations of gradual economic stabilisation.
Outlook
While firms remain broadly optimistic about Nigeria’s macroeconomic trajectory, the report signals a dual reality of improved sentiment alongside persistent structural challenges, particularly in employment and operating costs. The survey suggests that sustained policy reforms addressing security, taxation, and financing conditions will be key to converting business confidence into real economic expansion.
