75% of businesses plagued by borrowing costs; CBN makes rate decision today
By Mary Adenike
Three-quarters of businesses in the private sector identified high interest rates as the top business constraint last month, according to the latest Business Expectation Survey (BES) by the Central Bank of Nigeria.
The survey result comes ahead of the CBN’s first Monetary Policy Committee (MPC) meeting for the year, which started on Wednesday and the interest rate decision is expected on Thursday.
The apex bank, which had rescheduled the meeting twice, increased the country’s monetary policy rate, also known as the benchmark interest rate, by 875 basis points last year to 27.50 percent from 18.75 percent.
High interest rates have increased the cost of borrowing, making it more expensive for businesses to take out loans for investment and expansion. The BES survey, which covered three key sectors: industry, services, and agriculture, also showed that 74.3 percent of businesses rated insecurity as a major challenge.
Others are insufficient power supply (73.9 percent) high taxes (73 percent), financial problems (69.3 percent), and high bank charges (68.2 percent).
“The overall confidence index on the macroeconomy indicated that businesses were optimistic in January 2025. Respondent firms expressed optimism about the overall macro economy, which may be attributed to their positive outlook on the exchange rate and volume of business activity,” the report said.
It added that all the sectors expressed optimism in January 2025, with the industry sector recording the highest optimism, and that the agriculture sector indicated the highest expansion plan for February 2025. “Respondent firms expect the Naira to appreciate across all the reviewed periods.”
A breakdown of the report revealed that the mining and quarrying sector had the highest prospect for employment while agriculture had the highest prospect for expansion in February 2025.
“In line with the favourable expectations, businesses hope to employ more workers in February 2025,” it said.
