Nigerian businesses are bracing for relief on the lending front, with borrowing rates anticipated to decline gradually over the coming months amid expectations of a more resilient naira, according to findings from the Central Bank of Nigeria’s latest Business Expectations Survey.
The December 2025 survey, which canvasses sentiment among business leaders spanning Nigeria’s major economic sectors, paints a cautiously optimistic picture of the country’s financial trajectory, though significant structural headwinds remain firmly in place.
The data reveals mounting confidence in the naira’s stability against the US dollar across multiple time horizons. The exchange rate expectation index—a key barometer of currency sentiment—registered 26.6 points for the current month before climbing to 28.8 points for the following month. Looking further ahead, the index jumped to 36.4 points over a three-month window and reached 39.7 points when projecting six months out.
These progressive gains signal what analysts are interpreting as genuine market confidence in the currency’s trajectory, a notable shift from the volatility that has characterized Nigeria’s foreign exchange markets in recent years.
Paralleling the currency optimism, expectations surrounding borrowing costs suggest a steady easing of credit conditions that could provide much-needed breathing room for businesses struggling with high financing costs. The borrowing rate expectation index stood at 15.6 points in the current month but is projected to fall to 14.7 points next month, declining further to 11.5 points over three months and reaching 9.9 points by the six-month mark.
“Respondents expect the naira to US dollar exchange rate to steadily appreciate across review month periods, as indicated by positive indices,” the CBN stated in its report. “Also, they anticipate a continuous positive outlook for the borrowing rate during the same periods.”
Market analysts point to several factors underpinning the improved outlook. Tighter monetary management by the central bank, ongoing reforms in the foreign exchange market, enhanced dollar liquidity, and renewed confidence following recent policy interventions have all contributed to the shifting sentiment.
The CBN’s sustained efforts to stabilize the exchange rate and normalize monetary conditions appear to be bearing fruit in terms of business confidence, even as the real economy continues to grapple with persistent challenges.
Despite the encouraging forward-looking indicators, the survey reveals a sobering reality on the ground. Average capacity utilization across economic sectors stood at just 49.8% in December 2025—meaning businesses are operating at roughly half their potential output levels.
This significant underperformance underscores a critical disconnect: while macroeconomic expectations are improving, the translation into tangible business expansion remains constrained. The gap between optimism and operational reality highlights the complex challenges facing Africa’s largest economy.
The central bank didn’t sugarcoat the obstacles ahead. Infrastructure deficits continue to plague businesses across sectors, from unreliable power supply to inadequate transportation networks. High taxation burdens are squeezing profit margins, while access to affordable credit—despite anticipated rate declines—remains limited for many small and medium-sized enterprises.
These structural constraints, according to the CBN, are effectively capping the speed at which improved economic expectations can materialize into genuine growth and expansion. The findings suggest that while monetary policy may be moving in the right direction, Nigeria’s broader developmental challenges require coordinated fiscal and structural reforms.
As Nigeria navigates the first month of 2026, the survey’s findings offer a mixed message: financial conditions appear poised to improve, potentially easing pressure on businesses and consumers alike. However, converting this improving sentiment into sustained economic momentum will require addressing the deep-seated structural issues that continue to hamper productivity and growth.
For now, Nigerian businesses are cautiously optimistic, watching closely to see whether the anticipated easing in borrowing costs and strengthening naira will finally provide the catalyst for broader economic recovery.
WHAT YOU SHOULD KNOW
Nigerian businesses expect borrowing costs to fall and the naira to strengthen over the next six months, driven by improved monetary policies and foreign exchange reforms.
However, this financial optimism hasn’t translated into real economic expansion—businesses are still operating at only 50% capacity due to persistent infrastructure deficits, high taxes, and limited credit access.
While the financial outlook is improving, Nigeria’s structural problems remain the main barrier preventing economic growth from matching business confidence.
