CBN: Taxes, insecurity, interest rates squeeze Nigerian firms

By Mariam Abeeb

Nigerian businesses identified multiple taxation, insecurity and high interest rates as their biggest constraints in September, according to the Central Bank of Nigeria’s latest Business Expectations Survey.

The CBN survey showed that high or multiple taxation recorded the highest constraint index at 67.1 points, followed by insecurity with 66.2 points and high interest rates with 64.3 points.

The findings come despite continued optimism among businesses, with the overall Business Confidence Index standing at 13.4 points during the month.

The apex bank said firms remained hopeful about the economic outlook, citing increased demand, economic diversification and improved access to finance as major factors supporting their confidence.

“High/Multiple Taxation, Insecurity and High Interest Rate were the top three business constraints,” the CBN stated in the report.

Unfavourable political climate ranked fourth with 61.8 points, while high bank charges followed with 61.5 points.

Competition recorded 60.2 points, while unclear economic laws and an unfavourable economic climate each scored 58.7 points.

Financial constraints and poor infrastructure recorded 57.5 and 55.0 points, respectively.

Despite the pressures, the apex bank said the business outlook remained positive.

It noted that respondents attributed their positive outlook mainly to increased demand, which accounted for 29.3 per cent, economic diversification at 18.9 per cent, and access to finance at 13.5 per cent.

The industry sector recorded the strongest improvement in business confidence, rising from 17.1 points in August to 19.4 points in September.

However, confidence in the services sector declined from 13.3 to 10.2 points, while agriculture fell from 13.9 to 12.8 points.

The three sectors nevertheless maintained positive sentiment during the review period.

The CBN projected that business confidence would rise to 23.6 points in December 2026 and 36.1 points by March 2027.

The survey also showed that borrowing costs remained a major concern for businesses, with firms expecting interest rates to remain high across the forecast periods.

However, respondents anticipated a modest decline in borrowing costs over the next six months.

“Respondents anticipate that borrowing rates will remain high across all review periods, as evidenced by the sustained positive borrowing rate indices,” the CBN said.

“However, there are expectations of a modest decline over the next six months.”

On the foreign exchange market, businesses remained optimistic about the naira, with respondents expecting the currency to record modest gains against the United States dollar.

The CBN said all regions expressed optimism about the macroeconomic outlook for the coming month, except the South-East.

The North-East emerged as the most optimistic region across the forecast period.

The findings come amid ongoing Federal Government efforts to reform Nigeria’s tax system and reduce multiple taxation affecting businesses.

In June 2025, President Bola Tinubu signed four tax reform laws covering taxation, tax administration, revenue service operations and the Joint Revenue Board.

The Federal Government subsequently introduced a presumptive tax framework for micro, small and medium enterprises in March 2026, aimed at simplifying tax compliance and encouraging informal businesses to formalise.

The Joint Revenue Board has also prohibited the collection of road taxes, levies and related charges through checkpoints, including road stickers, as part of efforts to curb multiple taxation.

Despite these measures, the CBN survey indicates that taxation remains the leading concern among businesses, while insecurity and financing costs continue to weigh heavily on their operations.

The latest findings therefore point to a business community that remains cautiously optimistic about the future but continues to face significant operating pressures.