Multiple taxation has emerged as the biggest constraint confronting businesses in Nigeria, recording an index of 67.1 points in September, according to the Central Bank of Nigeria’s (CBN) latest Business Expectations Survey.
The survey showed that businesses continued to contend with a combination of high tax burdens, insecurity and elevated interest rates, despite ongoing economic and fiscal reforms by the Federal Government.
High/multiple taxation ranked first among the major factors constraining business activities during the month, followed by insecurity with an index of 66.2 points and high interest rates at 64.3 points.
The findings highlight the continued pressure on operating costs as businesses navigate a challenging environment characterised by rising statutory obligations, security concerns and relatively high financing costs.
The CBN survey measures businesses’ perceptions of prevailing economic conditions and their expectations regarding business activity, employment, investment and other key economic indicators.
While the latest results point to significant operational challenges, businesses maintained a positive outlook on the economy during the period.
The overall business confidence index stood at 13.4 points in September, indicating that respondents remained optimistic about business conditions despite the constraints affecting their operations.
The positive confidence reading suggests that businesses continue to see opportunities for expansion and improved economic activity, even as the cost and difficulty of doing business remain major concerns.
Multiple taxation has remained a longstanding concern among operators in Nigeria, particularly manufacturers, small and medium-sized enterprises and other businesses that face levies and charges imposed by different levels of government and agencies.
Business groups have repeatedly argued that the multiplicity of taxes and levies increases production costs, complicates compliance and weakens the competitiveness of Nigerian businesses.
The latest CBN survey reinforces those concerns, with taxation emerging ahead of insecurity and interest rates as the most prominent constraint reported by businesses in September.
Insecurity, which ranked second at 66.2 points, also remains a major impediment to business operations, particularly for companies involved in manufacturing, agriculture, logistics, transportation and other activities requiring the movement of goods and personnel across the country.
High interest rates ranked third at 64.3 points, reflecting continued concerns over the cost and availability of credit to businesses.
The financing constraint is particularly significant for businesses seeking working capital, expansion funding and investment financing, as elevated borrowing costs can limit their ability to increase production, retain workers and undertake new investments.
The combination of taxation, insecurity and high financing costs therefore continues to place pressure on businesses even as macroeconomic conditions show signs of improvement in some areas.
The survey’s positive confidence reading, however, indicates that businesses have not completely lost faith in the prospects for economic activity.
A sustained improvement in the operating environment could strengthen that confidence further if businesses experience lower production costs, improved access to affordable credit, greater security and a reduction in the number of taxes and levies imposed on them.
The findings also underscore the importance of ongoing efforts to streamline Nigeria’s tax system and reduce overlapping taxes and charges imposed by different government authorities.
For businesses, particularly those operating on thin margins, the cumulative effect of multiple taxes can significantly raise the cost of production and affect the prices of goods and services.
The survey comes amid broader government efforts to reform Nigeria’s tax administration and improve the efficiency of revenue collection, while seeking to create a more predictable environment for investment and private-sector growth.
However, the continued prominence of multiple taxation among businesses’ concerns suggests that the impact of such reforms has yet to fully translate into a significant reduction in the tax burden perceived by operators.
The CBN survey therefore points to a need for policymakers to balance revenue mobilisation with measures that preserve the capacity of businesses to produce, invest and create jobs.
Addressing the constraints identified by businesses could also improve private-sector confidence and support stronger economic growth, particularly as the government seeks to increase domestic production and attract fresh investment.
For businesses, the latest survey underscores the gap that remains between economic reform initiatives and the day-to-day realities of operating in Nigeria, with taxation, security and financing costs still exerting significant pressure on firms.
