CBN survey shows business confidence slips in June amid rising operational costs

Business confidence among Nigerian firms moderated in June 2026 as rising operational costs and macroeconomic pressures weighed on sentiment.

This is according to the latest Business Expectations Survey (BES) released by the Central Bank of Nigeria (CBN).

The survey showed that the Business Confidence Index (BCI) declined to 7.2 points in June from 7.9 points recorded in May, reflecting a slight deterioration in business sentiment despite continued optimism about the broader economic outlook.

What the report is saying

According to the CBN’s Statistics Department, formal sector businesses maintained a positive outlook during the month, supported by government economic reforms and diversification efforts.

• “The Business Confidence Index stood at 7.2 points in June 2026, signalling continued optimistic sentiment among formal businesses,” the report stated.

While businesses continue to face significant operational and macroeconomic challenges, expectations for future economic conditions remain positive.

The survey projects that the macroeconomic outlook will improve steadily over the coming months, with the index expected to rise to 17.6 points in July, 24.1 points over the next three months, and 30.9 points within six months.

More insights

Businesses identified economic diversification initiatives and expansionary fiscal policies as the primary drivers of confidence.

• According to the survey, 38.3% of respondents cited structural economic diversification as the key factor supporting optimism, while 16.2% pointed to government fiscal measures.
• However, persistent energy supply challenges and geopolitical uncertainties continue to weigh on business operations.

Energy shortages accounted for 23.4% of the factors dampening sentiment, while 16.5% of respondents highlighted global geopolitical risks as a major concern.

Mining sector leads confidence rankings

The Mining and Quarrying sector emerged as the most optimistic segment of the economy, recording a confidence score of 42.9 points.

• The sector also posted the highest Average Capacity Utilisation (ACU) rate at 58.5%, while 84.6% of firms surveyed indicated plans to expand operations in the near term.
• Agriculture recorded improved sentiment, with its confidence index rising to 12.2 points in June from 9.4 points in May.
• In contrast, confidence within the Industrial sector eased to 10.9 points from 12.5 points, while the Services sector recorded a sharp slowdown, falling to 2.9 points.

Across all sectors, average capacity utilisation remained broadly stable, declining marginally to 55.3% from 55.9% in the previous month.

Despite expectations of increased business activity and stronger order volumes in the coming months, companies remain cautious about expanding their workforce.

• The survey showed that businesses expect higher activity levels and order inflows in July, with index readings of 13.3 points and 12.8 points, respectively.
• However, the Employment Outlook Index for the next month remained negative at -8.3 points, suggesting that firms are prioritising cost management and capital preservation over workforce expansion.

The findings indicate that rising operating costs, financing constraints, and broader economic uncertainties continue to discourage hiring despite expectations of stronger business activity.

Regional sentiment mixed

The survey also highlighted significant regional differences in business confidence.

• The North-East recorded the strongest sentiment among the six geopolitical zones with a confidence score of 29.5 points, followed by the North-West at 19.8 points.
• In contrast, business sentiment remained negative in parts of southern Nigeria. The South-South recorded a confidence index of -7.9 points, while the South-East posted -9.0 points, reflecting weaker business conditions in those regions.

On the monetary front, respondents expressed optimism about exchange rate stability, with many expecting the naira to appreciate gradually against the U.S. dollar over the medium term.

However, access to finance remains a key challenge.

The survey showed that borrowing conditions remain tight, with private sector borrowing indices ranging between 20 and 22 points, indicating that elevated lending rates and restrictive credit conditions could continue to limit business expansion plans through the remainder of 2026.

What you should know

The June reading follows an improvement in business confidence recorded in May, when the BCI rose to 7.9 points from 3.9 points in April.

According to the CBN, stronger perceptions of government policies and progress in economic diversification have supported sentiment in recent months, although concerns around energy supply, financing costs, and global uncertainties continue to pose risks to business performance.

While confidence remains positive overall, the latest survey suggests that rising operational costs and persistent structural constraints are tempering business optimism even as firms anticipate stronger economic conditions in the second half of the year.