Businesses across various sectors have identified high interest rates and insecurity as the most pressing challenges they face as they look ahead to 2025, according to the February Business Expectations Survey by the Central Bank of Nigeria (CBN).
According to the survey released on Wednesday, these constraints are expected to weigh heavily on operations, even as firms remain optimistic about the broader macroeconomic environment.
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The survey revealed that 75 per cent of respondents cited high interest rates as a significant hurdle, closely followed by insecurity at 73.9 per cent and insufficient power supply at 73.8 per cent.
High taxes and financial problems also featured prominently, with 73 per cent and 68.5 per cent of firms respectively flagging these issues as critical barriers to growth.
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These constraints are likely to weigh on operational efficiency and profitability, particularly for small and medium-sized enterprises (SMEs) that are more vulnerable to financial pressures. However, despite these hurdles, businesses remain cautiously optimistic about the year ahead.
Sectoral optimism and expansion plans
The survey revealed a strong sense of optimism across all sectors, with the construction sector leading the way in employment prospects for March 2025. This sector reported the highest likelihood of hiring more workers, reflecting a positive outlook on infrastructure development and real estate activity.
The mining & quarrying sector also stood out, with the highest prospects for expansion in March 2025.
The electricity, gas & water supply sector also reported significant expansion plans, suggesting potential investments in energy and utilities.
Across the board, businesses expressed confidence in the macroeconomic environment, with all three broad sectors—industry, services, and agriculture—reporting a positive outlook for employment and expansion over the next six months.
The industry sector, in particular, recorded the highest level of optimism, driven by strong performance in manufacturing and construction.
Positive activity, FX expectations
Respondent firms were optimistic about the volume of business activity in the coming months, with indices pointing to favourable conditions in March, May, and August 2025.
The volume of business activity index showed a positive trend, with scores of 29.7 for the next month, 37.1 for the next three months, and 42.6 for the next six months.
Also, businesses expect the Naira to appreciate across all reviewed periods, which could provide a boost to import-dependent sectors and ease some of the financial pressures caused by high interest rates and bank charges.
This anticipated exchange rate stability is likely contributing to the overall positive sentiment among firms.
Capacity utilisation
The survey also noted an improvement in overall capacity utilisation in February 2025, with the construction sector once again leading the way, suggesting that firms are operating closer to their full potential, which could drive productivity and economic growth.
The volume of total order book index also showed a positive trend, with a score of 5.9, indicating that businesses are receiving more orders and expect demand to remain strong in the coming months.
This may be a promising sign for sectors such as manufacturing and market services, which rely heavily on order volumes to sustain operations.
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