Businesses Lean On Appreciating Naira As Confidence Index Doubles

Nigerian businesses are expressing renewed confidence in the country’s economic trajectory, with fresh data pointing to a significant upswing in sentiment and expectations for a stronger Naira in the months ahead.

The latest survey findings indicate that optimism among business operators is broad-based and deepening, as projections suggest a sharp rise in the Business Confidence Index (CI), a key measure of economic sentiment.

Currently standing at 18.7 index points, the CI is forecast to more than double to 41.1 points over the next six months, signalling rising expectations for sustained macroeconomic improvement. Analysts attributed the growing optimism to anticipated increases in business activity across all sectors and periods under review. In particular, the positive outlook for the Nigerian currency has reinforced confidence among firms surveyed.

A major driver of this sentiment is the prevailing belief that the Naira will appreciate further against the US Dollar in the near term. In recent trading, the local currency held firm below the N1,600 per dollar threshold, exchanging at between N1,587 and N1,590 per dollar in the parallel market early Tuesday.
Managing director of Financial Derivatives Company, Mr. Bismarck Rewane, projected that the Naira would likely hover between N1,600 and N1,650 in the coming weeks, noting that the currency remains about 26.82 per cent undervalued by traditional metrics.

Across sectors, optimism remained strong with Agriculture sector topping the CI in May 2025 at 23.2 points, reflecting resilience in farming activities. Industry also showed robust confidence, with projections indicating the index could more than double to 42.2 points within six months. Businesses are preparing to scale up operations in the first half of the year, with expectations high for increased hiring across various industries.

In terms of job creation, the Construction sector is leading with the strongest employment outlook, while Mining & Quarrying, along with the Electricity, Gas & Water Supply sectors, top the list for planned expansion in June 2025. Additionally, average capacity utilisation rose modestly to 58.7 per cent in May, up from 56.9 per cent in April, suggesting a gradual improvement in productive efficiency among firms surveyed.

Despite the buoyant mood, Nigerian businesses continue to grapple with longstanding structural challenges. The three most pressing constraints cited in May were insecurity (74.5 per cent), high interest rates (73.9 per cent), and high taxes (73.4 per cent).

These hurdles, stakeholders warn, may weigh on the pace of recovery if left unaddressed.