Cost pressures, weak demand slow growth as firms struggle with finance, power and rising operating expenses…..
Rising taxes and fuel price adjustments slowed the pace of business growth in Nigeria in January 2026, dragging business confidence to its lowest level in six months, according to the latest Business Confidence Monitor report released by the Nigerian Economic Summit Group.
The report showed that the Current Business Performance Index fell to 105.8 points in January from 112.0 points in December 2025, marking its weakest reading in six months, although it remained above the 100-point threshold that separates expansion from contraction.
NESG attributed the slowdown to mounting cost pressures, weaker post-festive consumer demand and the combined effects of new tax measures and higher energy costs on business operations.
Sectoral data showed that business activity weakened across most parts of the economy. Agriculture and Trade slipped into contraction, recording 99.5 points and 92.7 points respectively, down from 112.9 points and 123.8 points in December. Manufacturing and Services remained in expansion at 115.8 points and 102.1 points, but both recorded slower growth compared with the previous month. The Non-manufacturing sector was the only segment that maintained relatively stronger expansion momentum.
NESG noted that all key sub-indices of the BCM including general business conditions, production levels, demand conditions, investment climate, financial conditions, supply orders, trade stockpiling, access to credit and cash flow declined compared with December 2025.
The group said the broad-based slowdown reflected a typical post-festive moderation, worsened by persistent structural constraints facing businesses.
Cost pressures intensified sharply during the period, with the Cost of Doing Business Index rising to 90.5 points in January from 54.7 points in December 2025. The Input Prices Index also climbed to 96.9 points from 68.9 points in the previous month. NESG described the development as a “perfect storm” driven by new tax reforms, fuel price adjustments and lingering inflationary effects, which squeezed profit margins and constrained business activity.
According to the report, firms continued to face limited access to finance, unreliable electricity supply and rising commercial property costs — factors that dampened investment decisions and weighed on overall performance across sectors. NESG said these challenges have increased operating risks and reduced the capacity of businesses to expand production and employment.
Meanwhile, the Future Business Expectation Index, which tracks short-term outlook over one to three months, declined to 124.7 points in January from 132.6 points in December 2025, marking the second straight month of easing confidence. Despite the moderation, businesses across all sectors remained optimistic about near-term conditions, though at varying levels.
NESG added that if the government sustains its reform agenda without policy reversals, Nigerian businesses could be better positioned to leverage improved stability for growth, resilience and stronger performance in the months ahead.
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