Nigeria’s business expansion slowed sharply in January 2026 as rising operational costs, new tax reforms, fuel price adjustments and persistent inflationary pressures weighed heavily on firms across key sectors, according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG).
The report showed that the cost of doing business index surged to 90.5 points in January from 54.7 points in December, while input prices jumped to 96.9 points from 68.9 points, highlighting intensifying cost pressures on businesses.
“These elevated cost pressures are primarily driven by a ‘perfect storm’ of new tax reforms, fuel price adjustments, and the lagged effect of existing inflationary pressures,” the NESG said.
Overall business activity weakened, with the NESG-BCM index falling to 105.8 points in January from 112.0 points in December 2025, marking its lowest level in six months.
“The slowdown reflected the weakening state of business performance, as two sectors — agriculture and trade — fell into the contractionary region,” the report noted.
The agriculture sector declined to 99.5 points from 112.9 points, while trade dropped sharply to 92.7 points from 123.8 points, pushing both sectors below the 100-point expansion threshold. These declines offset continued, though slower, growth in manufacturing and services.
Manufacturing activity eased slightly to 115.8 points from 117.9 points, while the services sector slipped to 102.1 points from 104.3 points, remaining in expansion territory but at weaker levels. The non-manufacturing sector was the only segment that sustained an expansionary trend during the month.
The report also highlighted a broad-based softening in business conditions, as key sub-indices — including general business situation, production, demand conditions, investment, financial conditions, supply orders, trade stockpiling, access to credit and cash flow — all declined compared with December.
“This reflects the typical post-festive moderation of business activities amid weak consumer demand,” the NESG explained.
Beyond cost pressures, businesses continued to grapple with limited access to finance, irregular power supply and rising commercial property costs, factors that further dampened investment and worsened overall business performance.
Looking ahead, optimism among firms moderated. The Future Business Expectation Index fell to 124.7 points in January from 132.6 points in December, signaling cautious sentiment over the near term.
“The sustained optimism, though cautious, hinges on a supportive policy environment, currency stability and stronger export demand, while election-related uncertainties could restrain new investment,” the report said.
Among sectors, manufacturing recorded the strongest outlook, while agriculture posted the weakest level of confidence for the next one to three months.
