BUSINESS confidence among Nigerian enterprises strengthened significantly in August, with expectations of a stronger naira and a gradual easing in borrowing costs, offering a positive outlook for banks and other financial institutions.
The Central Bank of Nigeria’s (CBN) latest Business Expectations Survey showed that the overall Business Confidence Index (BCI) rose to 14.8 points in August 2026 from 5.7 points in July, signalling a marked improvement in sentiment among formal-sector businesses.
The survey indicated that respondents expect the naira to appreciate against the United States dollar over the current, one-month, three-month and six-month review periods, while borrowing-rate expectations remained positive, suggesting expectations of a marginal decline in financing costs.
The outlook is significant for banks as improved business confidence, stronger demand and expectations of lower borrowing costs could support credit demand, loan repayment capacity and overall banking activity.
Respondents projected business confidence to rise further to 23.6 points in September, 30.1 points in November 2026 and 36.1 points by February 2027.
According to the survey, increased demand, economic diversification and the monetary policy stance were the major factors supporting positive sentiment, accounting for 25.9 percent, 18.3 percent and 14.2 percent respectively.
The report also showed that the financial condition and credit access indices remained positive, while respondents expressed optimism about business activity. The volume of total orders recorded an index of 20.3 points, while the volume of business activity stood at 19.7 points.
For banks, the improving business environment could translate into increased demand for working-capital facilities, investment loans and other credit products as companies anticipate higher business volumes.
However, high interest rates remained one of the major constraints identified by businesses, with an index of 63.5 points. High bank charges ranked fourth among the major constraints, at 61.1 points.
Multiple taxation ranked highest at 67.8 points, followed by insecurity at 66.9 points. Competition recorded 59.5 points, while unclear economic laws and an unfavourable economic climate each stood at 57.7 points.
Despite concerns over financing costs, respondents expect borrowing rates to moderate marginally. The borrowing-rate indices remained within the 18-19 point range across the review periods, indicating expectations of some easing in borrowing costs.
The survey also showed that all broad sectors maintained positive macroeconomic outlooks. Industry recorded an index of 17.1 points in August, up from 11.5 points in July, while Agriculture rose from 3.4 to 13.9 points. Services increased from 3.6 to 13.3 points.
The Electricity, Gas and Water Supply sector recorded the strongest confidence in its own operations at 50.0 points, followed by Mining and Quarrying at 46.7 points and Agriculture at 44.9 points.
Meanwhile, the Construction sector recorded the strongest expansion outlook at 73.9 points, suggesting potential opportunities for banks to expand lending to construction companies and related value chains.
The survey found that average capacity utilisation remained broadly stable at 55.8 percent in August, compared with 55.9 percent in July. Mining and Quarrying recorded the highest capacity utilisation at 58.1 percent.
The CBN said the August survey was conducted between August 9 and 14, 2026, covering 1,900 business enterprises across Industry, Services and Agriculture, with a response rate of 96.8 percent.
The latest survey provides a cautiously positive outlook for the banking sector, particularly if the expected improvement in economic activity, naira appreciation and moderation in borrowing costs materialise over the coming months.
