Nigeria’s economy is showing encouraging signs of recovery, with businesses recording stronger production, rising demand, and improved profitability across major sectors. However, this positive momentum is being overshadowed by soaring operating costs that are making companies increasingly cautious about expanding their operations. According to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG), businesses are growing but remain reluctant to commit to fresh investments because of mounting financial and structural challenges.
The report revealed that Nigeria’s Current Business Performance Index climbed to 108.6 points in July, reflecting stronger economic activity compared to both June and the same period last year. Growth was driven largely by non-manufacturing industries, while manufacturing, agriculture, services, and trade all recorded expansion. Despite this progress, businesses continue to struggle with rising energy costs, high borrowing rates, inadequate infrastructure, and insecurity, all of which are putting pressure on profit margins and slowing long-term investment decisions.
Manufacturing, one of Nigeria’s biggest employers, experienced significant improvement, with increased activity in cement, textiles, apparel, footwear, chemicals, and pharmaceutical production. Agriculture also benefited from favorable rainfall and stronger crop yields, while the services sector returned to growth after a weak June, led by improved performance in financial services, real estate, and professional services. However, several industries—including telecommunications, plastics, motor vehicle assembly, and paper manufacturing—remain under pressure due to persistent power shortages, expensive raw materials, and limited access to affordable credit.
The NESG noted that while President Bola Tinubu’s economic reforms appear to be stabilizing business activity, structural bottlenecks continue to limit investor confidence. Businesses identified poor infrastructure, energy shortages, rising commercial rents, insecurity, and restricted access to financing as the biggest barriers to expansion. These challenges are increasing operational expenses and forcing many companies to delay investment plans that could create jobs and boost production. The report also warned that concerns over Dangote Refinery’s move toward dollar-denominated petrol pricing could keep energy costs elevated, adding further uncertainty for businesses in the months ahead.
Although business leaders remain optimistic about Nigeria’s economic outlook, confidence has begun to soften as cost pressures persist. The NESG believes the country has reached a critical stage where sustaining economic recovery will depend on reducing the cost of doing business rather than relying solely on rising demand. The group stressed that improving electricity supply, expanding access to affordable financing, strengthening infrastructure, and lowering energy costs will be essential to encouraging new investments, creating employment opportunities, and ensuring Nigeria’s economic recovery remains on a stable and sustainable path.
source: Business day
