…as industry sector tops confidence index for next six months
In May 2025, Nigerian firms across all sectors demonstrated a strong sense of optimism regarding the state of the macroeconomy, according to the Central Bank of Nigeria (CBN).
Among the sectors, agriculture recorded the highest confidence levels during the review month, reflecting growing faith in its stability and performance. Meanwhile, the mining and quarrying sector along with the electricity, gas and water supply sector showed the most aggressive plans for business expansion heading into June 2025.
Firms surveyed in the CBN survey also expressed expectations that the Naira would appreciate during the various periods under review. Within the current month, the agriculture sector also posted the highest level of capacity utilisation among all sectors surveyed, highlighting its significant level of operational activity.
Firms across every sector surveyed expressed positive sentiments concerning employment and expansion prospects for all the review periods. While this overall optimistic outlook continued to prevail, companies noted that there were several operational challenges that might temper growth prospects. Chief among these concerns were insecurity, the burden of high interest rates, and heavy taxation, all of which remained key obstacles to sustainable business operations and investment planning.
Looking ahead, respondent firms expressed confidence that the volume of business activity in June, August, and November 2025 would be favourable, suggesting continued momentum in economic performance over the medium term.
The Confidence Index for the current month stood at 18.7 index points, reflecting the prevailing optimism among businesses with regard to macroeconomic conditions. Projections for the coming six months show an even stronger positive outlook, with the index expected to reach 41.1 points, indicating increasing business confidence over time.
Sectoral analysis revealed that in the current month, the Agriculture sector led the way with a confidence index of 23.2 points, outperforming all others. This trend of sectoral optimism is expected to be sustained over the next six months, particularly within the Industry sector, where the confidence index is projected to more than double to 42.2 index points.
The overall positive sentiment is mirrored across all geopolitical regions in Nigeria. The North-East emerged as the region with the highest optimism, posting 36.2 index points. In contrast, the South-East recorded the lowest optimism at just 2.3 index points. Analysts have attributed the low confidence in the South-East to the region’s persistent insecurity, which continues to constrain business operations and discourage investment.
Respondents also reported a favourable outlook for several operational indicators during the review month, including the volume of total orders, volume of business activity, and the Financial Condition Index, all of which suggest strengthening business fundamentals.
Optimism concerning the volume of business activity extended into the projections for the following month and other review periods, pointing toward potential growth in economic activities and commercial engagements in the short to medium term.
Aligned with this expected business expansion, firms are also planning to increase their workforce in June 2025. Sectoral analysis revealed that the Construction sector is expected to lead in employment generation, while the Mining and Quarrying sector has the highest expansion prospects for that month.
Nevertheless, significant operational constraints were identified by respondents. Insecurity topped the list, with a weighted index of 74.5, followed closely by high interest rates at 73.9, and high taxation at 73.4. These top three concerns underscore the financial and economic risks that businesses currently face. In contrast, issues like poor infrastructure (61.5) and an unfavourable political climate (61.2) were at the lower end of the top 10 business challenges, indicating that firms are more focused on immediate economic constraints than structural or political issues at this time.
Respondents also expressed expectations that the Naira-to-Dollar exchange rate would appreciate across the different review periods, as evidenced by a positive outlook index. However, this confidence comes alongside expectations of an increase in borrowing rates during the same timeframe, suggesting that while firms see currency strength improving, they also anticipate tighter monetary conditions.
In terms of productivity, the average capacity utilisation across all sectors rose slightly to 58.7 percent in May 2025, up from 56.9 percent recorded in April 2025. The improvement indicates better resource deployment and operational efficiency among firms, adding weight to the overall positive business sentiment recorded during the period.
