Nigeria recorded the greatest improvement in business activity among eight major African economies in May, defying mounting inflationary pressures triggered by escalating tensions in the Middle East that have pushed up global oil, fuel and fertiliser prices.
BusinessDay’s analysis of the latest Purchasing Managers’ Index (PMI) reports from S&P Global showed that the PMI in Africa’s most populous nation rose by 3.24 percent to 54.1 in May from 52.9 in April, marking the highest reading since April 2025.
A PMI reading above 50 signals an improvement in business conditions, while a reading below 50 indicates deterioration. According to the report, the health of Nigeria’s private sector has now improved for four consecutive months.
Among the countries tracked, the West African nation posted the strongest month-on-month growth in business activity, followed by Egypt, whose PMI increased by 1.07 percent to 47.1, while Mozambique’s index edged up 0.20 percent to 49.9.
In absolute terms, Nigeria and Uganda recorded the continent’s highest PMI reading at 54.1. Nigeria last held the top position in the continent in October 2025.
“This impressive business condition was primarily due to accelerated expansion in both output and new orders, with evidence pointing to improving customer demand and the launch of new products,” said Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank.
He added that input prices continued to rise, although the pace of increase slowed for a second consecutive month.
“This is also reflected in higher output prices, with the steepest increase seen in the manufacturing and agriculture sectors.”
The latest PMI data also revealed a weakening business climate across much of the continent. Five of the eight African economies surveyed recorded contractions in May, compared with three in April and two in March, suggesting that external shocks and inflationary pressures are increasingly weighing on private sector activity.
The PMI survey is compiled from responses from around 400 private-sector companies across sectors including agriculture, mining, manufacturing, construction, wholesale, retail and services. Data has been collected since January 2014.
S&P Global noted that output and new orders in Nigeria expanded at their fastest pace in seven and nine months, respectively, supported by stronger customer demand and new product launches.
“Output growth was recorded across all four broad sectors covered by the survey,” the report said.
Nigeria’s rise comes just a month after Kenya recorded Africa’s fastest PMI improvement. In April, Kenya’s PMI increased by 3.56 percent to 47.7 despite remaining below the 50-point threshold. However, East Africa’s biggest economy slipped further into contraction in May, with the PMI falling to 46.6, its lowest level in 10 months.
The decline coincided with a resurgence in inflation. Kenya’s consumer inflation accelerated to 6.7 percent from 5.6 percent in April, reaching its highest level since January 2024, according to the Kenya National Bureau of Statistics.
According to Christopher Legilisho, economist at Standard Bank, inventory purchases weakened due to softer sales, cash-flow concerns and rising costs.
“These declines may stem from the week-long disruption to business activity because of nationwide protests by transportation sector players that constrained movement,” he said.
Legilisho noted that inflationary pressures had intensified, driven largely by higher fuel and transportation costs. “Still, despite subdued business momentum, firms remain optimistic about future conditions.”
Middle East tensions threaten inflation gains across Africa
For the past three month, escalating tensions involving the United States, Israel and Iran have unsettled global commodity markets, raising concerns about supply disruptions through the Strait of Hormuz, a critical corridor for global oil trade.
The resulting increase in energy, transport and agricultural input costs is beginning to filter through to African economies, threatening recent gains in inflation control.
The World Bank warned that the conflict could have far-reaching implications for food security and inflation across the continent.
“Prices of Brent crude oil and liquefied natural gas have risen sharply, while fertiliser prices have also increased amid disruption to shipments through the Strait of Hormuz,” the World Bank said in its latest Africa’s Development Update.
“These developments threaten both current and future planting seasons, potentially exacerbating food insecurity.”
The multilateral lender cautioned that rising fuel and food import costs could force central banks, particularly in oil-importing economies, to delay interest-rate cuts or tighten monetary policy further.
In Nigeria, headline inflation rose for a second consecutive month to 15.69 percent in April, the highest level in five months, reversing an 11-month disinflation trend. Food inflation also accelerated to 16.06 percent as higher fuel costs and supply chain disruptions filtered through to consumer prices.
Economists expect inflationary pressures to intensify further following another increase in domestic fuel prices, potentially complicating the policy outlook for the Central Bank of Nigeria, which has kept its Monetary Policy Rate at 26.75 percent last month.
“Increasing fuel costs following the outbreak of war in the Middle East continued to drive up purchase prices in May,” authors of the Nigeria PMI report said.
They added that purchase costs rose sharply again, although the overall rate of inflation eased to a three-month low.
“Where companies increased staff pay, this was often to provide help with higher living costs, and those for transportation in particular.”