Firms are betting big on the Nigerian economy due to a general improvement in the business environment and the naira stability resulting from foreign exchange reforms.
The foreign exchange (FX) market began the year at an official exchange rate of N1,538.50/$ and closed June 5 at N1,553.11/$.
At the parallel market, the exchange rate stood at N1,615/$, closing before the Sallah holiday at N1,605/$. This has revved up investor confidence and brought dollar inflows into the economy.
Some firms pointed to the naira stability as their biggest reason for betting on Nigeria, with others tapping an improved environment.
Read also: Naira hits two-month high of N1,565.46 per dollar as market stability holds
Sense of optimism
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.
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 that responded to 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 continues 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 remain 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 attributed the low confidence in the South-East to the region’s persistent insecurity, which continues to constrain business operations and discourage investment.
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.
Similarly, economic activities expanded for the sixth straight month in May, though cost pressures mounted.
Read also: Inflation to fall, Naira to trade at a narrow, stable band in the near term says Bismarck Rewane
Firms pledge investments
A parade of international heavyweights has pledged billions in investments as the nation eyes economic recovery after years of stagnancy.
South Korean digital wallet service, Gluwa, and Swedish Telecoms giant, Ericsson, among others, recently pledged $119m investment in Nigeria’s digital economy, health and other critical sectors.
ExxonMobil promised to invest $1.5 billion in deepwater exploration and development in Nigeria in March.
The International Finance Corporation (IFC) is betting $70 million on five Nigerian firms to help the country enhance its access to renewable energy.
In April 2025, AP Moller-Maersk pledged a $600 million investment to expand existing port infrastructure.
Two mining firms are investing $1.3 billion in Nigeria, facilitated by the AFC.
Also, more than 216 Chinese companies expressed interest in investing across various sectors in Nigeria in March, with 74 firms focusing on the oil and gas industry alone.
The total investment commitment from China reached nearly $40 billion in that month, reflecting a growing economic collaboration between the two nations, according to Joseph Tegbe, director-general of the Nigeria-China Strategic Partnership.
Nigeria secured a total of $7.6 billion investment commitments at the 2024 Africa Investment Forum, hosted by the African Development Bank (AfDB) and its partners in December 2024.
Risks
Leave a Comment