Businesses across Nigeria have ranked high borrowing costs as their toughest operational challenge, surpassing long-standing issues such as insecurity and erratic power supply, according to the Central Bank of Nigeria’s (CBN) June 2025 Business Expectations Survey.
The survey, which sampled 1,900 firms across agriculture, industry, and services sectors, revealed that high interest rates scored 75.6 on the business constraint index, followed closely by insecurity (75.2) and insufficient power supply (74.3). Other major challenges identified include high bank charges (73.2), multiple taxes (68.9), and unfavourable economic policies (68.7).
The findings underscore the ripple effects of the CBN’s tight monetary policy, which has kept the Monetary Policy Rate (MPR) at 27.5% for three consecutive meetings in a bid to tame inflation and stabilise the naira.
While the approach has helped reduce headline inflation to 22.22% in June 2025, business operators say the high cost of borrowing is strangling access to credit, particularly for small and medium enterprises (SMEs).
Former Chief Economist at Zenith Bank, Marcel Okeke, described the policy as “injurious to the real economy,” warning that many SMEs have been “crowded out of the financial system” because they cannot afford expensive loans.
Similarly, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, urged the CBN to review its policy, noting that “a 27.5% interest rate is a depressing burden on businesses, especially those in the manufacturing and agriculture sectors.”
Despite these challenges, the CBN’s survey revealed that business confidence remains cautiously optimistic, with the Business Confidence Index (BCI) projected to rise from 20.7 in June to 41.3 over the next six months.
The North-East region recorded the highest optimism at 37.1 index points, while the South-East scored the lowest at 4.4 points, which analysts linked to higher sensitivity to interest rate fluctuations in the region.
CBN Governor Olayemi Cardoso, addressing journalists after the Monetary Policy Committee’s 301st meeting, defended the apex bank’s decision to maintain all policy parameters, stating that “the policy stance is necessary to sustain disinflation momentum and contain emerging inflationary pressures.”
However, concerns remain that the policy could deepen economic stagnation if access to affordable credit is not addressed.
Experts say the CBN must strike a balance between controlling inflation and supporting growth, suggesting a gradual reduction in interest rates as inflation stabilises.
“Unless borrowing costs are eased, more businesses may shut down or relocate operations, worsening unemployment and slowing GDP growth,” said financial analyst Tope Fasua.
The survey also indicates that businesses expect modest improvements in foreign exchange stability and naira appreciation in the coming months, which could ease import costs but may not immediately translate to lower lending rates.
The CBN report highlights the urgent need for policy interventions that can stimulate business growth while maintaining macroeconomic stability. With high borrowing costs now seen as a greater threat than insecurity, economists argue that collaboration between monetary and fiscal authorities is crucial to ensure that businesses can thrive in Nigeria’s challenging economic environment.