Nigeria’s business environment strengthened in August 2026, with the Nigerian Economic Summit Group’s Current Business Performance Index rising to 112.7 points from 108.6 points in July.
The latest reading was also higher than the 107.3 points recorded in August 2025, indicating an improvement in business activity compared with both the previous month and the corresponding period last year.
The August performance represented the strongest reading since February 2026, when the index stood at 117.2 points.
The index opened the year at 105.8 points in January.
The latest figures suggest that businesses experienced stronger operating conditions during the month, although the recovery remained uneven across sectors.
Manufacturing records strongest improvement
According to the NESG, manufacturing recorded the sharpest improvement during the month.
The sector benefited from stronger activity and improved business conditions, although manufacturers continued to face challenges linked to operating costs, energy supply and access to finance.
Agriculture remained largely stable, while non-manufacturing activity moderated compared with July.
The uneven performance indicates that businesses are responding differently to changes in consumer demand, input costs, financing conditions and market opportunities.
The NESG said most components of its Business Confidence Monitor remained in expansion territory during August.
General business conditions, demand, exports, financial results, credit access, cash flow and employment all improved compared with July.
Demand and employment improve
The improvement in demand suggests that consumer and business spending remained relatively resilient during the month.
Higher demand can support production, sales and employment, especially when businesses have sufficient access to working capital and raw materials.
The NESG also recorded improvement in employment, suggesting that some businesses were expanding their workforce or increasing labour utilisation in response to stronger activity.
However, the report indicated that production, operating profit and new orders remained positive but softened slightly from July.
This suggests that while the business environment improved overall, the pace of growth was not uniform across all indicators.
Investment remains in contraction
One of the weaker areas was investment, which remained in contraction territory despite showing signs of improvement.
Businesses may be delaying major capital expenditure because of high financing costs, uncertainty around demand and concerns about the cost of imported machinery and equipment.
Investment is critical to long-term economic growth because it improves productive capacity, creates jobs and supports technological development.
A prolonged period of weak investment could therefore limit the economy’s ability to sustain stronger growth.
The NESG’s figures suggest that businesses are improving their current operations but remain cautious about committing significant resources to expansion.
Inventory building ahead of shopping season
The trade stockpiling index recorded a significant increase as businesses built up inventory ahead of the back-to-school shopping season.
The increase indicates that firms anticipated resilient consumer demand and sought to prepare for higher sales.
Inventory accumulation can support market availability and reduce the risk of shortages, but it can also increase financing pressure if goods remain unsold for long periods.
Businesses must therefore balance the need to maintain adequate stock with the risk of tying up working capital.
Cost pressures remain a concern
Despite the improvement in business confidence, cost pressures continued to weigh on the operating environment.
Businesses in Nigeria continue to face challenges related to energy, transportation, raw materials, exchange-rate movements and financing costs.
Higher operating expenses can reduce profit margins even when sales and demand improve.
The NESG’s findings therefore suggest that the recovery in business activity remains vulnerable to rising costs.
For the improvement in confidence to translate into sustained economic expansion, businesses will require greater macroeconomic stability, improved infrastructure, better access to credit and a more predictable operating environment.
The August index nevertheless points to a stronger business climate, with improvements across demand, exports, cash flow, employment and financial performance.
The challenge for policymakers is to sustain the recovery while addressing the cost pressures and investment weakness that continue to limit the expansion of private-sector activity.
