Business confidence in Nigeria plummeted to its lowest level in six months during January 2026, as revised tax policies and escalating fuel prices significantly hampered economic momentum across most sectors. According to the latest Business Confidence Monitor released by the Nigerian Economic Summit Group, the challenging environment created what analysts described as a perfect storm for enterprises, squeezing profit margins and constraining investment activities nationwide.
Current Business Performance Index Declines Sharply
The NESG report revealed that the Current Business Performance Index dropped to 105.8 points in January, down from 112.0 points recorded in December 2025. While the index remained above the critical 100-point benchmark that signals economic expansion, this decline marked the weakest performance since mid-2025. The slowdown was attributed primarily to escalating operating costs, subdued consumer demand following the festive period, and the combined effects of new tax policies alongside higher energy prices on business operations.
Sectoral Analysis Reveals Widespread Weakness
A detailed breakdown of sectoral performance showed economic activity softening across most areas of the Nigerian economy. The agriculture and trade sectors slipped into contraction territory, posting indices of 99.5 points and 92.7 points respectively, compared with significantly higher figures of 112.9 points and 123.8 points in December. Manufacturing and services continued to expand, recording 115.8 points and 102.1 points, but both sectors experienced slower growth than in the previous month. Only the non-manufacturing sector maintained relatively stronger expansionary momentum during this challenging period.
Cost Pressures Intensify Business Challenges
Cost pressures rose dramatically during the review period, with the cost of doing business index surging to 90.5 points in January from 54.7 points in December 2025. Simultaneously, the input prices index climbed to 96.9 points from 68.9 points, indicating significant inflationary pressures on raw materials and operational expenses. NESG reported declines across all major business confidence sub-indices, including general business conditions, production levels, demand, investment, financial health, supply orders, trade stockpiling, access to credit and cash flow.
Structural Constraints Compound Seasonal Slowdown
The widespread moderation in business performance reflected not only the usual post-holiday slowdown but also intensified structural constraints facing Nigerian enterprises. The report highlighted several persistent challenges, including limited access to finance, irregular power supply, and rising commercial property costs, which collectively dampened investment and deteriorated business performance across sectors. These issues have continued to undermine investment decisions, elevate operational risks and constrain firms' ability to expand production and employment opportunities.
Future Expectations Show Cautious Optimism
Looking ahead, the Future Business Expectation Index, which tracks business sentiment over the next one to three months, declined for the second consecutive month, easing to 124.7 points in January from 132.6 points in December 2025. Despite this moderation, optimism remained across all sectors, though at varying levels. Business managers maintained broad optimism that sustained policy reforms without reversals could create a more stable environment, enabling Nigerian businesses to strengthen resilience, unlock growth opportunities and improve overall performance in the coming months.
Survey Methodology and Geographic Coverage
The NESG Business Confidence Monitor data is generated from qualitative responses reported in the Business Conditions Survey, a monthly survey conducted by the economic think tank. The survey gathers information on various variables across different economic activities from owners and managers of businesses operating in Nigeria, with particular focus on Lagos, Kano, and Abuja to provide representative monthly measures of managerial confidence in the Nigerian business environment. Business confidence is defined as a pool of economic indicators that measure current business conditions and the extent of optimism or pessimism that business managers feel about the general state of the Nigerian economy as it affects key business decisions within three months.
