Nigeria’s business environment moderates in December

Omeiza Bilal

Nigeria’s business environment maintained its expansionary trajectory in December 2025, marking twelve consecutive months of improvement in business conditions.

The NESG Business Confidence Monitor (BCM) Current Business Performance Index stood at 112.0 points in December 2025, down from 113.3 points in November 2025, but 11.2 index points higher than its level in December 2024.

The moderation in the pace of expansion reflects a general softening in business activities across sectors, despite relatively strong performance in key segments and a notable surge in activity within the Agriculture sector.

A sectoral breakdown indicates that all five major economic activities remained in the expansionary zone during the month, although three sectors recorded declines relative to November 2025.

The Agriculture sector posted the strongest improvement, rising by 9.6 points to 112.9 index points, while Manufacturing (117.9) also recorded a marginal increase. By contrast, Trade (123.8), Non-Manufacturing (101.8), and Services (104.3) declined compared to November 2025. Key sub-indices tracked by the BCM—including the general business situation, production, financial conditions, supply orders, trade stockpiling, access to credit, and cash flow—recorded moderate declines relative to November 2025.

This broad-based moderation points to a more cautious business stance and subdued consumer demand.

During the month, the cost of doing business rose to 61.6 points from 54.3 points in November 2025, while input prices continued to increase, albeit at a slower pace. Together, these developments contributed to the relative slowdown in business performance in the month.

Nevertheless, persistent financing constraints, unreliable power supply, policy uncertainty, high commercial property costs, and elevated exchange rate pressures remained the most significant challenges, dampening business performance and confidence during the month.

Agriculture

The NESG–Stanbic IBTC Business Confidence Monitor (BCM) Index for the Agriculture sector rose in December 2025 to 112.9 points from 103.3 in November.

This recovery was primarily driven by notable expansion of business activities in Crop Production, Livestock, and Agro-Allied sub-sectors, due to higher seasonal sales activities in December of every year.

A review of activities across the five agricultural sub-sectors revealed that all segments, except Forestry, recorded expansion in business activities. Livestock and Agro-Allied activities exited the contraction region, registering 105.2 and 108.2 points, respectively.

This indicates heightened business activities within key food-producing segments and underscores the high seasonal demand for agricultural output in this period of the year. Combined with good weather and improved harvests, improved access to inputs, growth in agro‑processing, supportive macroeconomic conditions, and increased mechanisation, strengthened overall business performance in the sector.

Manufacturing

The NESG–Stanbic IBTC Business Confidence Monitor (BCM) Index for the Manufacturing sector improved in December 2025, rising to 117.9 points from 114.2 in November.

This growth was driven by strong performance in key sub-sectors such as Food, Beverages, and Tobacco; Textile, Apparel, and Footwear; Plastic and Rubber Products; Pulp, Paper, and Paper Products; and Electrical and Electronics. At the sub-sector level, four activities — Wood and Wood Products, Non-Metallic Products, Cement, and Basic Metal, Iron, and Steel — slipped into contraction and recorded declines during the month.

However, the expanding sub-sectors accounted for over 70 percent of Nigeria’s manufacturing output, so their positive performance explains the sector’s overall improvement.

Surveyed businesses noted that manufacturing activities remain constrained byinadequate electricity supply, persistent insecurity, shortages of raw materials, risinginput prices, and weakening sales.

These challenges disrupt production, erode profitmargins, constrain investment, dampen customer demand, and ultimately hinder thesector’s ability to sustain expansion.

Non-manufacturing

Riding on improved business conditions, the Non-manufacturing sector recorded a slight slowdown in December 2025, with the BCM index easing to 110.2 points from 117.7 in November, though still reflecting month-on-month galloping growth in business activities.

Except for Oil & Gas Services, all sub-sectors remained in expansion, but with a notable moderation in growth across the expanding segments.

The slowdown in business expansion in the sector had stemmed from persistentstructural constraints – insecurity, inadequate infrastructure, high rental costs, limited access to finance, multiple taxation, and rising operating expenses – which continue to constrain expansion, profitability, and competitiveness.

Services

Nigeria’s Services sector remained in expansion but saw its second consecutive monthly slowdown in business momentum in December 2025.

The NESG–Stanbic IBTC Services BCM eased to 104.3 points from 105.8 in November, mainly due to weaker activity in Broadcasting, Real Estate, Professional Services, and Telecommunications & Information Services. Except for Broadcasting, all sub-sectors stayed in expansion. Only Financial Institutions recorded modest growth over the prior month, reflecting gains from the improved macroeconomic environment.

Nonetheless, structural constraints, including inadequate energy supply, high operating costs, and weak digital infrastructure, continue to limit the sector’s full potential.

Tackling these bottlenecks through targeted reforms and investment in service-oriented industries will be key to enhancing resilience and achieving inclusive, sustainable national growth.

Trade

The NESG–Stanbic IBTC Trade Index showed continued expansion in business activities in December 2025, though at a slower pace. The Trade BCM Index eased to 123.8 points from 132.9 points in November.

Despite a seasonal rise in sales, weak consumer demand and cautious spending dampened business performance during the month. At the sub‑sectoral level, both Wholesale and Retail trade-maintained expansion, but at a reduced pace.

Despite this positive trend, structural challenges persisted, with recurring bottlenecks constraining growth. Insecurity in key markets, frequent supply chain disruptions, and enduring structural weaknesses continued to pose significant obstacles, weighing heavily on trade operations and moderating the sector’s overall momentum.

Future business expectations

To assess near‑term performance expectations of Nigerian businesses, the NESG–Stanbic IBTC Future Business Expectation Index offers insights into prevailing optimism and pessimism over the next one to three months.

In December 2025, the index stood at 132.6 points, reflecting a slightly weaker level of optimism compared with 134.8 points in November. Across sectors, Trade recorded the highest optimism at 162.9 points, followed byManufacturing (158.3 points), Non‑Manufacturing (141.5 points), and Agriculture (135.5 points). Meanwhile, Services, at 114.9 points, reflected the weakest expectation of improved conditions.

However, sentiment moderated across all sectors compared with the previous month, suggesting cautious optimism amid ongoing improvements in macroeconomic conditions.

Despite this moderation, overall optimism remains supported by factors such asseasonal economic activity, ongoing policy reforms, relative exchange rate stability,infrastructure investments, and a gradual recovery in consumer demand.

These drivers continue to sustain measured confidence across key sectors, particularly Agriculture, Retail Trade, Non‑Manufacturing, and Services. As these supportive factors strengthen, businesses remain strategically positioned to leverage emerging opportunities while adapting to evolving policy directions and market realities, thereby sustaining resilience and growth momentum in the months ahead.