Nigeria's business environment sustained its expansion trend in April, but the pace of growth remained weak, underscoring a fragile and uneven recovery, according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG).
Current Business Performance Index
The current business performance index rose marginally to 102.1 points in April from 101.2 points in March. However, compared with the 112.3 points recorded in the same month last year, the reading suggests that business conditions have weakened considerably over the past 12 months.
Conflicting PMI Reports
While the Central Bank of Nigeria (CBN) reported last week the first contraction in business activity in 16 months, the NESG and a similar report by Stanbic IBTC Bank indicated that the private sector remained in expansion territory, though both admitted the growth was weak.
The CBN's composite Purchasing Managers' Index (PMI) fell to 49.4 points in April from 53.2 points in March, dropping below the 50-point threshold that separates expansion from contraction. The apex bank attributed the decline to weakening economic activity across the industry and services sectors, with only agriculture sustaining expansion during the period.
In contrast, Stanbic IBTC's PMI survey showed that private sector activity remained in expansion for the third consecutive month, with the headline PMI rising to 52.4 points in April from 51.9 points in March.
Sectoral Performance
The NESG report revealed mixed performance across sectors, with agriculture and non-manufacturing emerging as the major drivers of growth during the month. Agriculture rebounded strongly to 103.2 points from 91.1 points in March, lifted largely by increased consumer demand linked to festive activities. The non-manufacturing sector returned to expansion at 101.6 points after slipping into contraction in March from 98.4 points.
Manufacturing, however, slipped into contraction at 98.7 points from 103.4 in March. The decline was driven by contractions in sub-sectors including textile, cement, chemical and pharmaceutical products, as well as motor vehicles and assembly. The report noted that food, beverage and tobacco, alongside basic metal, iron and steel, sustained expansion within the manufacturing sector.
The services sector remained in expansion at 101.5 points, but growth eased from 104.7 in March. A notable development was real estate slipping into contraction for the first time in more than 12 months. Trade also held on at 102.7 points, with wholesale trade recovering from contraction despite weaker retail trade performance.
Persistent Challenges
Despite the modest improvement in the headline index, the report makes clear that Nigerian businesses continue to grapple with persistent structural challenges, including limited access to finance, unstable electricity supply, rising rental costs and insecurity. These constraints kept investment and export indicators in contraction territory and pushed input prices higher, even as the overall cost of doing business moderated slightly.
Future Outlook
On the outlook, the NESG Future Business Expectations Index rose slightly to 128.6 points from 128 in March, indicating that businesses expect conditions to improve in the next one to three months, though not without reservations. Trade and manufacturing recorded the strongest optimism among all sectors, while agriculture and services were the least confident about the near-term outlook.
The NESG attributed the cautious tone partly to ongoing geopolitical tensions in the Middle East and their knock-on effects on energy prices.
