Nigeria’s Business Growth Hits 12 Months, Costs Dampen Confidence

Nigeria’s business environment recorded its twelfth consecutive month of expansion in December 2025, signalling continued economic stabilisation, though rising operating costs and policy uncertainty are increasingly dampening business confidence.

This is according to the Business Confidence Monitor released by the Nigerian Economic Summit Group (NESG), which shows that while overall activity remained firmly in expansion territory, the pace of growth moderated as firms adopted a more cautious outlook.

Growth holds, but momentum softens

NESG data shows that the Current Business Performance Index eased slightly to 112.0 points in December, down from 113.3 points in November, but remained comfortably above the 100-point benchmark that separates expansion from contraction.

The index was also 11.2 points higher than its December 2024 level, underscoring sustained improvement in business conditions over the past year despite persistent structural challenges.

According to NESG, the data reflects the underlying resilience of Nigeria’s business environment, even as mounting uncertainty and long-standing constraints continue to restrain confidence across key sectors.

Rising costs, structural bottlenecks pressure firms

The report highlights that manufacturers remain among the most affected by Nigeria’s structural weaknesses. Inadequate power supply, insecurity, raw material shortages and escalating input costs are steadily eroding profit margins and weighing on investment decisions.

Several underlying indicators showed signs of strain in December. Sub-indices tracking production levels, demand conditions, supply orders, access to credit and cash flow all recorded moderate declines, pointing to softer activity and subdued consumer demand.

At the same time, the cost of doing business index surged sharply to 61.6 points, up from 54.3 points in November, reflecting intensifying pressure from rising operating expenses. NESG noted that these conditions are forcing firms to operate defensively, focusing more on cost containment than expansion.

Agriculture and manufacturing lead as other sectors slow

Sectoral performance during the month was mixed. Agriculture emerged as the strongest performer, with its business performance index rising 9.6 points to 112.9, driven by seasonal demand and increased activity across crop production, livestock and agro-allied businesses.

NESG attributed the rebound to heightened food-related activity typical of the year-end period.

Manufacturing also posted a modest improvement, with its index increasing to 117.9 points, supported by food and beverages, textiles, plastics, paper products and electricals. However, the group cautioned that the sector’s gains remain fragile due to persistent cost pressures and infrastructure deficits.

In contrast, momentum weakened across other segments. Trade, while still the most upbeat in absolute terms at 123.8 points, eased from November as cautious consumer spending offset seasonal sales. Services declined for a second straight month to 104.3 points, while non-manufacturing moderated to 110.2 points, reflecting lingering structural bottlenecks.

Outlook: Cautious optimism amid uncertainty

Looking ahead, business optimism remained positive but softened. The Future Business Expectation Index dipped to 132.6 points in December, from 134.8 points in November, although it remained higher than its level a year earlier.

Trade recorded the strongest forward-looking sentiment, followed by manufacturing, while services posted the weakest outlook.

NESG noted that expectations are being shaped by uncertainty around policy reforms, a challenging operating environment and potential spillovers from political developments.

While seasonal demand, relative exchange-rate stability and ongoing infrastructure investments provide some support, the group warned that sustaining the expansion will depend on addressing core constraints such as power supply, access to finance and policy consistency that continue to weigh on Nigeria’s business climate.