Nigeria’s private sector recorded a slower pace of expansion in March 2026, as rising operational costs and persistent electricity challenges continued to pressure businesses, according to the latest report by the Nigerian Economic Summit Group.
The report, titled Business Confidence Monitor (BCM), revealed that while economic activity remained in expansion territory, the momentum weakened significantly, reinforcing concerns about the sustainability of recovery across key sectors.
Business growth slows in Nigeria despite expansion
Data from the BCM showed that the Current Business Performance Index declined sharply to 101.2 points in March, down from 117.2 points in February and 106.6 points recorded in the same period last year.
Although the index remained above the 100-point threshold—which signals expansion—the drop indicates that business growth slows in Nigeria as firms grapple with mounting structural and macroeconomic constraints.
Analysts note that the decline reflects a fragile operating environment, where businesses are still expanding but at a much slower and uncertain pace.
Rising costs and power deficits hit productivity
A key factor behind the trend that business growth slows in Nigeria is the persistent rise in input costs. Companies reported continued pressure from high energy expenses, logistics costs, and raw material prices.
Electricity shortages also remain a major bottleneck. Frequent power outages have forced many firms to rely on alternative energy sources such as diesel and gas-powered generators, significantly increasing operating expenses.
Businesses further cited limited access to affordable financing, insecurity in key production zones, and rising rental costs as additional burdens constraining productivity.
Sectoral performance shows mixed trends
Sectoral breakdowns in the report indicate uneven performance across industries as business growth slows in Nigeria.
The manufacturing sector recorded a notable slowdown, with its index dropping to 103.4 points from 121.1 in February. Sub-sectors such as cement, plastics, rubber, and wood products experienced contraction, largely due to raw material shortages and infrastructure challenges.
The services sector also moderated to 104.7 points, while trade settled at 103.8 points. Within trade, retail activity remained relatively resilient, supported by steady consumer demand, but wholesale operations weakened due to supply chain disruptions and financing constraints.
More concerning was the performance of non-manufacturing activities, which fell into contraction at 98.4 points, down from 128.9 points in the previous month. This decline was driven primarily by reduced activity in oil and gas services.
Agriculture, a critical sector for employment and food security, also recorded deeper contraction at 91.1 points. Stakeholders attributed this to insecurity, inadequate infrastructure, and persistent funding gaps affecting both crop production and livestock operations.
Investment and profitability decline
The report further showed that investment activity weakened as firms scaled back expansion plans in response to economic uncertainties. Elevated input costs, energy shortages, and security concerns have made capital deployment increasingly risky.
As a result, sub-indices measuring exports, operating profits, and new supply orders all contracted during the review period.
While there was a slight moderation in overall business costs—falling to 59.7 per cent from 65.2 per cent—the level remains significantly high, continuing to squeeze profit margins.
Experts warn that unless cost pressures ease, the trend that business growth slows in Nigeria could persist in the coming months, with implications for employment and economic stability.
Business confidence weakens amid uncertainty
The Business Expectations Index, which measures firms’ outlook for future performance, also declined to 128.0 points from 135.4 points recorded in February.
Although still relatively optimistic, the drop signals growing caution among business leaders. Confidence remained strongest in trade and manufacturing but weakened notably in agriculture and services.
According to analysts, the dip in expectations reflects both domestic challenges and external risks, including global geopolitical tensions that are driving volatility in energy prices.
Global pressures add to domestic challenges
The NESG highlighted that international developments—particularly tensions in the Gulf region—are contributing to rising oil prices and energy costs, further complicating Nigeria’s economic outlook.
For a country heavily reliant on imported inputs and energy-linked pricing, such global shocks have direct implications for production costs and inflation.
Combined with domestic structural issues, these pressures continue to reinforce the reality that business growth slows in Nigeria, even as reforms attempt to stabilise the macroeconomic environment.
Outlook for Nigeria’s business environment
Looking ahead, economic analysts suggest that targeted policy interventions will be required to reverse the slowdown. These include improving electricity supply, enhancing access to affordable credit, and addressing security challenges affecting production hubs.
There are also calls for sustained investment in infrastructure and supply chain systems to reduce the cost of doing business.
While Nigeria’s private sector has shown resilience in remaining above the expansion threshold, the current trajectory indicates that growth remains vulnerable.
If underlying constraints are not addressed, the pace at which business growth slows in Nigeria could deepen, potentially undermining broader economic recovery efforts.