Nigeria’s business environment continued to expand in December 2025, marking the twelfth consecutive month of growth. However, according to the latest Business Confidence Monitor by the Nigerian Economic Summit Group (NESG), mounting uncertainty and structural challenges have moderated the pace of growth, reflecting a more cautious business climate.

The report, titled “Rising Uncertainty Dampens Nigeria’s Current Business Conditions”, revealed that the Current Business Performance Index for December stood at 112.0 points, slightly down from 113.3 points in November. Despite this slight dip, the index remained firmly in the expansion zone, showing an 11.2-point increase compared to the same period last year. This suggests that, while the growth rate has softened, Nigeria’s business environment has maintained its upward trajectory.

Constraints Weighing on Businesses

NESG noted that despite the overall expansion, Nigerian businesses faced several binding constraints that dampened confidence. These include:

• Limited access to finance
• Inadequate power supply
• Policy uncertainty
• High rental costs
• Persistent exchange rate pressures

These challenges have led to slower activity in several sectors, though overall performance remained positive. The report also pointed to weaker consumer demand, rising operating costs, and ongoing insecurity as factors affecting business dynamics.

Sector Performance: Agriculture Shines, Manufacturing Faces Struggles

Some sectors fared better than others. Agriculture emerged as the standout performer, with its Business Performance Index rising sharply by 9.6 points to 112.9. The sector’s growth was driven by seasonal sales, stronger activity in crop production, livestock, and agro-allied industries, reflecting the high seasonal demand for agricultural output at the end of the year.

In manufacturing, the index showed a modest improvement, climbing to 117.9 points. This growth was supported by food and beverages, textiles, plastics, paper products, and electricals. However, NESG highlighted that manufacturers continued to face persistent challenges, including inadequate electricity supply, rising input costs, shortages of raw materials, and weakening sales, all of which have constrained margins and reduced investment.

Slower Momentum in Trade, Services, and Non-Manufacturing

Meanwhile, other sectors such as Trade, Services, and Non-Manufacturing experienced a slowdown in momentum:

• Trade remained the most optimistic sector with an index of 123.8 points, but it showed a decline due to weak consumer demand and cautious spending, despite the boost from seasonal sales.
• Services saw a second consecutive month of decline, with its index falling to 104.3 points, reflecting weaker performance in broadcasting, real estate, and professional services.
• Non-Manufacturing moderated to 110.2 points, facing ongoing structural challenges.

Rising Cost of Doing Business

One key concern highlighted in the report is the rising cost of doing business, which surged to 61.6 points from 54.3 in November. This sharp increase underscores the growing pressure on businesses from rising operating expenses, affecting profitability and investment.

NESG’s findings also showed moderate declines in key sub-indices such as production, demand conditions, supply orders, access to credit, and cash flow, indicating a more cautious business stance and subdued consumer demand.

Looking Ahead: Cautious Optimism

Despite the mixed picture, the report revealed cautious optimism for the future. The Future Business Expectation Index dipped slightly to 132.6 points in December, down from 134.8 points in November but still higher than the previous year. NESG attributed this softer outlook to uncertainty around anticipated policy reforms, less supportive operating conditions, and the spillover effects of Nigeria’s recent elections.

Trade recorded the highest level of future optimism, followed by manufacturing, while the services sector posted the weakest expectations. NESG noted that higher production levels, improved supply orders, and infrastructure investments provided some offset to the uncertainties weighing on the outlook.

Conclusion: Tackling Structural Constraints is Key

Overall, the NESG report painted a picture of cautious optimism supported by seasonal activity, relative exchange rate stability, and ongoing infrastructure investment. However, for Nigeria to maintain momentum and improve the business environment, it will need to address long-standing structural constraints that continue to weigh on the business climate, including energy supply, access to finance, and policy stability.