NESG report highlights weakening momentum across key sectors amid rising costs and economic uncertainty…
Nigeria’s business environment remained in expansion territory in March 2026, but new data shows that growth is losing steam at a noticeable pace.
According to the latest Business Confidence Monitor released by the Nigerian Economic Summit Group, the Current Business Performance Index dropped significantly to 101.2 points in March, down from 117.2 points recorded in February.
While the index remains above the 100-point mark that signals expansion, the sharp decline underscores growing strain across multiple sectors of the economy. Compared to the same period last year, the reading also came in slightly below the 106.6 points recorded in March 2025, pointing to a gradual weakening in overall business momentum.
The report reveals a broad-based slowdown, with most sectors recording softer growth and some slipping into contraction.
Manufacturing activity moderated sharply, with its index falling to 103.4 points from 121.1 in the previous month. The trade sector also slowed, easing to 103.8 points from 108.7, as demand uncertainties weighed on wholesale activity despite some resilience in retail.
The services sector maintained expansion at 104.7 points, supported by activity in finance, real estate, and professional services, although rising operating costs continue to erode gains.
In contrast, non-manufacturing and agriculture sectors contracted, with indices of 98.4 and 91.1 points respectively. Agriculture recorded the steepest decline, driven by reduced crop output, weaker livestock activity, and stagnation in forestry.
A closer look at sectoral performance shows an uneven landscape. Within manufacturing, only a handful of sub-sectors including food and beverages, metals, and pharmaceuticals sustained growth. Others such as cement, plastics, and paper products experienced declines in output.
In the trade segment, retail activity provided some support, but wholesale trade slipped into contraction, reflecting distribution challenges and softer demand conditions.
Across the board, businesses continue to grapple with structural challenges. Limited access to financing, unreliable power supply, rising rental costs, input shortages, and persistent insecurity remain major constraints on productivity and expansion.
The report also flagged weakening investment sentiment. The investment sub-index stayed in contraction, indicating that firms are becoming increasingly cautious about committing capital amid heightened risks and uncertainty.
Key performance indicators including export volumes, operating profits, and new supply orders also declined, signaling reduced competitiveness and profitability.
Looking ahead, businesses remain cautiously optimistic, though confidence is fading. The Future Business Expectation Index fell to 128.0 points in March from 135.4 points in February, suggesting a more guarded outlook for the next one to three months.
Expectations were strongest in the trade and manufacturing sectors, while agriculture and services showed relatively weaker confidence levels.
The NESG noted that rising global oil prices driven by ongoing geopolitical tensions are adding to cost pressures, particularly through higher energy expenses, further dampening business sentiment.
Recent data from the Central Bank of Nigeria supports this trend. The bank reported that Nigeria’s Purchasing Managers’ Index stood at 53.2 points in March, indicating continued expansion but at a slower pace.
Although the PMI has now recorded over a year of sustained growth, the latest figures suggest that underlying macroeconomic challenges are beginning to take a toll on the strength and consistency of that expansion.
