Business Confidence in Nigeria Weakens Sharply Amid Rising Input Costs
Nigeria's business environment remained in expansion territory in March 2026 but experienced a significant decline in performance, as rising input costs, weak investment, and persistent structural challenges weighed heavily on key economic sectors. This finding is detailed in the latest Business Confidence Monitor (BCM) report released by the Nigerian Economic Summit Group (NESG) yesterday.
Sharp Decline in Current Performance Index
The report revealed that the Current Business Performance Index dropped to 101.2 points in March, down from 117.2 points in February 2026 and 106.6 points recorded in March 2025. This weaker performance is largely attributed to contractions in the agriculture and non-manufacturing sectors, alongside ongoing constraints such as limited access to finance, frequent power outages, insecurity, and high rental costs.
Nigeria's business environment remained in the expansion territory, exhibiting weaker performance compared to February 2026, the report noted, emphasizing that the decline reflects persistent constraints, including limited access to finance, frequent power outages, insecurity, and high rental costs.
Uneven Sectoral Performance Across the Economy
A breakdown of sectoral performance showed uneven outcomes across the economy. While manufacturing, trade, and services all remained in expansion, they recorded slower growth:
- Manufacturing fell to 103.4 points from 121.1 in February and 108.3 in March last year.
- Trade eased to 103.8 points from 108.7 in February but remained slightly higher than the 100.5 points recorded a year earlier.
- Services also slowed to 104.7 points from 109.2 in February and 105.5 in March 2025.
In contrast, the non-manufacturing and agriculture sectors slipped into contraction. Non-manufacturing dropped sharply to 98.4 points from 128.9 in February and 119.2 in March 2025, while agriculture declined to 91.1 points from 104.8 in February and 97.6 in the same period last year.
The report stated that business activities slowed in manufacturing, trade, and services, while index readings moved into the contraction region for non-manufacturing and agriculture during the month.
Specific Sector Challenges and Contributing Factors
Within the agriculture sector, performance weakened further as crop production and livestock activities contracted, while agro-allied and fishing sustained expansion. Forestry remained at a neutral level. The downturn is linked to insecurity, constrained financing, power supply disruptions, and infrastructure challenges, which drove up input costs and disrupted production.
Similarly, manufacturing activities slowed across most sub-sectors, with only a few maintaining expansion. Several sub-sectors, including cement, plastic and rubber products, wood processing, and non-metallic products, recorded contraction. The report highlighted that limited access to credit, irregular power supply, infrastructure bottlenecks, persistent insecurity, and raw material shortages contributed to the slowdown, resulting in high costs and reduced investment.
Non-manufacturing recorded one of the steepest declines, driven by weaker performance across oil and gas services and other segments. Although construction and natural gas remained in expansion, they posted softer growth.
Broader Economic Indicators and Investment Concerns
Across the broader economy, key indicators such as production, demand conditions, employment, and cash flow remained positive but weakened compared to February. However, export, operating profit, and supply orders slipped into contraction, while investment recorded a deeper decline, reflecting reduced willingness by firms to commit resources amid rising risks.
Notably, the investment sub-index recorded a deeper contraction in March 2026, highlighting reduced commitment of resources due to high-risk perception among businesses, the report stated.
Cautious Optimism for Future Business Expectations
Despite the weaker current performance, businesses remained optimistic about near-term conditions, although confidence moderated. The Future Business Expectation Index declined to 128 points from 135.4 in February, indicating cautious optimism.
The report noted that trade and manufacturing recorded the highest optimism levels at 160.5 points and 155.3 points, respectively, while agriculture and services posted weaker outlooks at 120.8 points and 116 points. It added that the cautious outlook reflects emerging energy-related cost pressures linked to geopolitical tensions in the Gulf region, which have pushed up global oil prices and heightened cost concerns for businesses.
