Businesses Expect Positive Naira Outlook Amid Challenges—CBN Survey

By Adedapo Adesanya

Nigerian businesses expect the Naira to record modest gains against the US Dollar in the coming months, even as multiple taxation, insecurity, and high interest rates remain major concerns for firms, the Central Bank of Nigeria has said.

The outlook was contained in the apex bank’s latest Business Expectations Survey for September, which showed that businesses remained broadly optimistic about the macroeconomic environment despite persistent operating pressures.

Business Post reports that the Naira recorded a very positive September, averaging around N1,329/$1.

According to the survey, respondents expressed optimism about the local currency across the various review periods, signalling expectations of continued stability and modest appreciation of the local currency against the Dollar.

The positive currency outlook formed part of a broader improvement in business sentiment, with the Business Confidence Index standing at 13.4 points in September.

The CBN said businesses attributed their optimism primarily to increased demand, economic diversification and improved access to finance.

Increased demand accounted for 29.3 per cent of the factors supporting the positive outlook, while economic diversification and access to finance accounted for 18.9 per cent and 13.5 per cent, respectively.

However, businesses continued to identify several challenges that could weigh on their operations and investment decisions.

High or multiple taxation emerged as the biggest constraint, recording 67.1 index points, followed by insecurity at 66.2 points and high interest rates at 64.3 points.

Other major concerns included an unfavourable political climate, which scored 61.8 points, and high bank charges at 61.5 points.

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

Financial constraints stood at 57.5 points, while poor infrastructure recorded 55.0 points.

The CBN noted that the industry sector recorded the greatest improvement in sentiment during the month, despite the broader challenges confronting businesses.

The persistence of elevated interest rates, however, could continue to weigh on investment and expansion plans, particularly for businesses that rely heavily on bank financing for working capital and new projects.

Regional sentiment was also broadly positive, with businesses across the regions expressing optimism about the macroeconomic outlook for the coming month.

The South-East was the only region that did not share the positive near-term outlook, while the North-East emerged as the most optimistic region across the forecast periods.