Nigeria’s Firms Face Rising Pressure From Taxes, Insecurity and High Interest Rates - CBN

Nigeria’s Business Confidence Holds Firm Despite Tax, Security and Financing Pressures

Nigerian businesses continued to face significant operating pressures in September as high or multiple taxation, insecurity and elevated interest rates emerged as the three biggest constraints affecting firms, according to the Central Bank of Nigeria’s latest Business Expectations Survey.

The CBN recorded constraint indices of 67.1 points for high or multiple taxation, 66.2 points for insecurity and 64.3 points for high interest rates. Unfavourable political conditions and high bank charges followed with 61.8 and 61.5 points respectively.

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Despite these challenges, the overall Business Confidence Index remained positive at 13.4 points in September, although it moderated slightly from August.

Taxation Remains the Biggest Business Constraint

High or multiple taxation ranked as the most significant constraint identified by Nigerian businesses during the September survey period, recording 67.1 index points.

Insecurity followed closely at 66.2 points, while high interest rates recorded 64.3 points. Competition, unclear economic laws and an unfavourable economic climate also remained significant concerns.

The CBN survey placed financial constraints at 57.5 points and poor infrastructure at 55.0 points, making them the lowest among the 10 leading constraints identified by firms.

The findings come as Nigeria continues to implement tax reforms intended to broaden the revenue base and improve tax administration. The Federal Government also introduced a presumptive tax framework for micro, small and medium-sized enterprises in March 2026, while measures have been introduced to curb multiple taxation through road taxes, levies and related charges.

Business Confidence Remains Positive

Despite the operating challenges, businesses maintained a positive outlook in September.

The Business Confidence Index stood at 13.4 points, with increased demand, economic diversification and access to finance identified as the leading factors supporting business sentiment.

Increased demand accounted for 29.3 per cent of the factors supporting firms’ positive outlook, followed by economic diversification at 18.9 per cent and access to finance at 13.5 per cent.

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

Services, however, moderated from 13.3 to 10.2 points, while agriculture declined from 13.9 to 12.8 points. All three sectors nevertheless remained in positive territory.

Firms Expect Conditions to Improve

The survey suggests that businesses expect confidence to strengthen over the coming months.

The Business Confidence Index is projected to rise to 23.6 points in December 2026 and 36.1 points by March 2027, indicating that firms expect operating conditions to improve despite the pressures currently affecting them.

Businesses also maintained a positive outlook on the exchange rate, with respondents expecting the naira to record modest gains against the US dollar across the review periods.

However, borrowing costs remain a concern. Firms expect interest rates to remain elevated in the near term, although the CBN said the survey points to expectations of a modest decline in borrowing costs over the next six months.

Financing Costs Remain Important for Property and Construction

The continued pressure from high interest rates has implications beyond businesses' day-to-day operating costs.

For the property and construction sector, elevated borrowing costs can affect developers' access to project finance, construction companies' working capital and the ability of prospective buyers to secure mortgages.

Higher financing costs can also influence project feasibility, particularly for developments that depend heavily on bank lending or require significant upfront capital.

The CBN's finding that access to finance remains one of the factors supporting business confidence therefore highlights the importance of credit conditions to investment and expansion across the wider economy.

Tax and Security Pressures Add to Operating Costs

The combination of taxation, insecurity and financing costs creates a broader cost environment for businesses operating in Nigeria.

For developers and construction companies, these pressures can feed into project budgets through financing expenses, compliance costs, security expenditure and other operating requirements.

This is particularly relevant to housing delivery because higher development costs can affect the viability of new projects and ultimately influence the price at which homes reach the market.

The survey does not establish a direct increase in property prices resulting from these constraints, but it highlights the wider business environment in which developers, contractors and other property-sector firms operate.

Outlook

The September CBN survey presents a mixed picture of Nigeria's business environment.

Firms remain under pressure from taxation, insecurity and high interest rates, but positive business confidence and expectations of stronger demand, economic diversification and improved access to finance point to cautious optimism.

For the property and construction industry, the trajectory of borrowing costs, tax administration and the broader operating environment will remain important factors in determining investment, project financing and the pace of new development.

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