Nigerian businesses recorded moderate growth in August 2025, but rising costs continue to cast a shadow over profitability and investor sentiment, according to the latest NESG–Stanbic IBTC Business Confidence Monitor (BCM).
The report showed that the Current Business Index (CBI) climbed to 107.3 points in August, up from 105.4 in July, reflecting improvements in manufacturing, services, trade, and non-manufacturing activities.
However, these gains were undermined by surging operational costs, with firms battling higher input prices, increased rents, unreliable power supply, weak access to finance, and persistent insecurity across parts of the country.
The sectoral review revealed that trade posted the strongest rebound, reversing the decline of the previous month.
The indices for Manufacturing (106.2), Non-Manufacturing (116.2), Trade (114.1), and Services (103.7) all improved compared to July.
Agriculture, however, slipped into contraction, falling to 95.6 index points.
Analysts attributed this decline to seasonal factors in Nigeria’s agricultural calendar.
August is often considered the “lean season,” ahead of the main harvest expected in September and October.
This suggests that agricultural output may rebound in the coming months.
According to Stanbic IBTC, “Crop production recorded the sharpest drop in August, likely due to the seasonal lean period.
The outlook for September and October remains positive as harvest season begins.”
While activity levels showed improvements, the cost of doing business rose sharply in August, reversing the brief relief seen in July.
The BCM highlighted that critical sub-indices such as investment, exports, access to credit, and input prices recorded weaker values, pointing to mounting challenges for firms.
“Persistent inflationary pressures, forex instability, and weak infrastructure continue to erode margins despite modest expansion in output,” the report stated.
This reflects broader concerns among businesses, especially in manufacturing and consumer goods, where rising import costs and electricity tariffs have heightened operating expenses.
Interestingly, businesses remain optimistic about the short-term outlook.
The Future Business Expectation Index rose to 131.5 points in August, from 126.1 points in July, suggesting confidence in better conditions within the next three months.
The optimism is largely tied to expectations of improved cash flows, higher production levels, stronger demand, and better supply chain conditions.
The trade sector showed the highest optimism, while agriculture remained the least confident, reflecting ongoing structural and seasonal challenges.
The services sector maintained its upward trajectory, recording its sixth consecutive month of expansion at 103.7 points, compared to 101.9 in July.
Analysts linked this growth to relative stability in foreign exchange liquidity and a moderation in price pressures.
The manufacturing sector, which had slipped into contraction in July, rebounded in August.
The recovery was supported by subsectors such as food, beverage and tobacco; textiles and apparel; wood products; and paper and pulp.
On the macroeconomic front, Stanbic IBTC highlighted that Nigeria’s industrial sector has shown remarkable improvement, contributing 20.9 per cent to GDP in Q1 2025, up from 10.4 per cent in Q4 2024.
This surge is partly linked to the structural reforms introduced by the Federal Government and the commencement of full-scale operations at the Dangote Refinery, which is expected to boost industrial output, employment, and exports.
With inflation expected to soften gradually and FX liquidity improving under the Central Bank of Nigeria’s reforms, analysts believe the economy is on course for steady growth.
The BCM projects Nigeria’s GDP growth at 3.5 per cent in 2025, slightly higher than the 3.4 per cent recorded in 2024.
This outlook is underpinned by structural reforms, improved trade conditions, and increased industrial activity.
However, experts caution that without addressing the high cost of doing business—particularly power supply challenges, insecurity, and credit access—the momentum may not translate into sustainable job creation and private sector profitability.
Commenting on the findings, the Comptroller-General of Customs, Adewale Adeniyi, recently urged businesses to focus on legitimate trade, stressing that structural reforms in ports and logistics would further ease operational costs.
Meanwhile, private sector leaders are calling for stronger fiscal interventions to reduce energy costs, enhance credit access, and protect industries from smuggling and cheap imports.
Economic analyst, Dr. Abiola Ajayi, noted that while optimism is high, businesses must tread cautiously.
“The rise in costs could suppress investment in the medium term if not addressed.
Policymakers need to stabilize the FX market further and incentivize local production to reduce reliance on imports,” she said.