Multiple taxation, insecurity and high interest rates were the biggest obstacles to Nigerian businesses in September, according to the Central Bank of Nigeria (CBN).
The findings are contained in the apex bank’s latest Business Expectations Survey. It showed that firms remained under pressure, but overall business sentiment stayed positive during the month.
The Business Confidence Index stood at 13.4 points in September. Firms expect conditions to improve in the coming months, driven largely by stronger demand, economic diversification and improved access to finance.
Top constraints
Tax-related pressure ranked as the most significant concern. High or multiple taxation recorded 67.1 index points, ahead of insecurity at 66.2 points and high interest rates at 64.3 points.
The scores highlight the combined pressure of government charges, security risks and expensive credit on business operations.
The other constraints among the 10 major ones were:
- Unfavourable political climate: 61.8 points
- High bank charges: 61.5 points
- Competition: 60.2 points
- Unclear economic laws: 58.7 points
- Unfavourable economic climate: 58.7 points
- Financial constraints: 57.5 points
- Poor infrastructure: 55.0 points
Poor infrastructure ranked last. The findings suggest that while infrastructure remains a longstanding challenge, firms currently see taxation, insecurity and the cost of borrowing as more immediate threats.
Sources of optimism
Respondents attributed their positive outlook mainly to increased demand, which accounted for 29.3 percent of supporting factors. Economic diversification followed at 18.9 percent and access to finance at 13.5 percent.
The industry sector recorded the strongest improvement in sentiment during the month.
Persistently high interest rates could continue to weigh on investment and expansion plans, particularly for businesses that depend heavily on bank financing for working capital and new projects.
Naira outlook
Businesses remained optimistic about the naira, with respondents expecting modest gains against the US dollar across the review periods.
Regional sentiment
Sentiment was broadly positive across regions. Businesses expressed optimism about the macroeconomic outlook for the coming month, with the South-East the only region that did not share the positive near-term outlook.
The North-East was the most optimistic region across the forecast periods.
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