High interest rates have overtaken insecurity and poor power supply as the biggest constraint facing Nigerian businesses, according to the Central Bank of Nigeria’s (CBN) latest Business Expectation Survey (BES) conducted in June 2025.
The survey, which sampled 1,900 firms across key sectors, revealed that interest rates scored the highest on the constraint index at 75.6 slightly above insecurity (75.2) and insufficient power supply (74.3). Businesses reported that elevated borrowing costs, driven by the CBN’s tight monetary stance, are significantly hurting profitability and limiting expansion efforts.
Despite these challenges, the report noted cautious optimism among firms, with expectations of improved business conditions over the next six months. The Business Confidence Index stood at 20.7 in June, projected to rise to 41.3 by year-end.
The CBN has maintained its benchmark interest rate at 27.5 percent for the fourth consecutive time, following cumulative hikes totaling 875 basis points, as part of efforts to rein in inflation and stabilise the naira.
Regional disparities also emerged in the survey. The South East recorded the lowest confidence level at 4.4, while the North East posted the highest at 37.1. Firms continue to anticipate a stronger naira but brace for further increases in borrowing costs.
CBN Governor Yemi Cardoso, speaking at the National Domestic Investment Summit in Abuja, defended the high interest rate regime, calling it a necessary trade-off in the current macroeconomic climate.
“High interest rates are painful we all know that,” Cardoso said. “But interest rates are not just about affordability, they are also about credibility.”
The survey also highlighted other major business constraints, including high taxes, bank charges, poor infrastructure, and unclear economic laws. However, the CBN noted that economic and financial risks far outweighed political challenges in the review period.