Nigeria’s economic landscape is currently facing significant headwinds, with rising Nigerian business costs emerging as a major concern for entrepreneurs and investors alike. Despite a consistent streak of expansionary growth, a recent report by the Nigerian Economic Summit Group (NESG) highlights a concerning trend: an increase in the cost of doing business has substantially dampened overall business confidence. This crucial finding indicates that while the economy may be growing, the underlying challenges for firms are intensifying, impacting their operational performance and future outlook across various sectors.
What is business confidence in Nigeria? Business confidence in Nigeria, as measured by the Business Confidence Monitor (BCM) from the NESG, reflects the optimism or pessimism of businesses regarding the current and future economic conditions. It is a key indicator of economic health, influencing investment decisions and overall market activity.
The NESG’s Business Confidence Monitor (BCM) report for December 2025 disclosed that the cost of doing business climbed to 61.6 points, a clear indicator of the increasing pressure on companies. This surge, coupled with elevated input prices, contributed significantly to a moderation in business performance throughout the month. The data underscores a period where firms found themselves grappling with a multitude of constraints, making strategic planning and operational efficiency more challenging.
Indeed, why are business costs rising in Nigeria has become a central question for many stakeholders. The report meticulously outlines the primary culprits: persistent financing constraints, an unreliable power supply that cripples productivity, significant policy uncertainty, exorbitant commercial property costs, and relentless exchange rate pressures. These factors collectively create a formidable barrier, severely dampening both current business performance and future confidence.
Despite the economy sustaining an expansionary streak for the twelfth consecutive month, the Nigeria business confidence vs economic growth paradox is evident. Business confidence softened considerably in December 2025 as the weight of rising operating costs took its toll. The current business performance index eased to 112.0 points, a dip from 113.3 points in November, reflecting a discernible moderation in activities across various economic sectors. Although the index remained above the critical 100-point expansion threshold, this slowdown signals growing pressures within the operating environment.
The moderation in the pace of expansion reflects a general softening in business activities across sectors, with the report offering granular sectoral data. While all five major sectors managed to stay in expansionary territory, three recorded declines compared to the previous month. The services sector, for instance, weakened to 104.3 points, while trade slowed to 123.8 points, primarily attributed to weak consumer demand and cautious spending patterns. Similarly, the non-manufacturing sector moderated to 110.2 points, with the NESG attributing this to persistent structural constraints that hinder growth.
Examining the manufacturing vs services sector Nigeria performance reveals interesting contrasts. In stark opposition to the general decline, agriculture emerged as a bright spot, rising to 112.9 points. This positive momentum was largely driven by seasonal demand and improved activity within crop production, livestock, and agro-allied sub-sectors. Manufacturing also experienced a marginal improvement, reaching 117.9 points, bolstered by strong performance in food, beverages, textiles, and plastics. However, even these sectors reported ongoing constraints from inadequate electricity, persistent insecurity, shortages of raw materials, rising input prices, and weakening sales.
For those seeking a Nigeria economic outlook guide, the report offers a candid assessment. The NESG Future Business Expectation Index declined to 132.6 points in December from 134.8 points in November. This downturn reflects a pervasive uncertainty surrounding anticipated policy reforms, an increasingly less supportive operating climate, and negative spillover effects stemming from recent electoral developments. These factors collectively contribute to a cautious future perspective among businesses.
Understanding Nigerian business challenges for beginners and established enterprises alike is crucial for navigating this complex environment. The persistent structural constraints, including inadequate infrastructure, high rental costs, limited access to finance, and multiple taxation, are not just theoretical issues but daily realities that impede growth and innovation. Addressing these foundational problems is paramount to fostering a more robust and predictable business ecosystem.
Looking ahead, the Nigerian economic forecast 2026 suggests that these underlying issues will continue to shape the business landscape. Without decisive policy interventions to mitigate the rising costs and structural impediments, the path to sustained, confident growth remains challenging. Policymakers must prioritize creating an enabling environment that reduces operational burdens and instills greater certainty for investors.
Despite the current hurdles, proactive engagement and strategic planning can still uncover business opportunities Nigeria 2026. Sectors like agriculture, which demonstrated resilience, and specific manufacturing niches may offer avenues for growth. However, success will depend heavily on the ability of businesses to adapt to the challenging cost environment and the government’s commitment to addressing fundamental economic issues.
The NESG report serves as a critical barometer, highlighting that while economic expansion is occurring, the true health of the business environment is being undermined by escalating operational expenses. The gap between economic growth metrics and dampened business confidence is a clear signal that the foundation for long-term prosperity needs urgent attention.
Ultimately, the persistent challenge of rising Nigerian business costs necessitates a concerted effort from both the public and private sectors to implement reforms that foster stability, reduce operational burdens, and reignite the confidence essential for sustainable economic development.
