Nigeria’s business environment extended its expansion streak to a twelfth consecutive month in December 2025, signalling continued economic stabilisation.
However, rising costs and policy uncertainty are increasingly weighing on business confidence.
This is according to the latest Business Confidence Monitor released by the Nigerian Economic Summit Group (NESG), which shows that while activity remained firmly in expansion territory, the pace of growth slowed as firms adopted a more cautious stance.
The Current Business Performance Index eased to 112.0 points in December, from 113.3 points in November, but stayed well above the 100-point threshold that separates expansion from contraction.
The reading was also 11.2 points higher than December 2024, highlighting sustained improvement in business activity over the past year despite persistent structural headwinds.
NESG said the data confirmed the resilience of Nigeria’s business environment, even as mounting uncertainty and long-standing constraints tempered confidence across several sectors.
What the report is saying
According to the report, manufacturers remain among the most affected by structural challenges. NESG warned that inadequate electricity supply, persistent insecurity, raw material shortages and rising input costs have combined to erode profit margins and constrain investment decisions.
Underlying indicators pointed to growing pressure across the economy. Key sub-indices tracking production, demand conditions, supply orders, access to credit and cash flow all recorded moderate declines in December, signalling softer activity and subdued consumer demand.
At the same time, the cost of doing business surged sharply to 61.6 points from 54.3 in November, underscoring the burden of rising operating expenses on firms.
These pressures, NESG noted, are forcing businesses to operate more defensively, prioritising cost management over expansion.
Agriculture and Manufacturing lead; others lose steam
Sectoral performance during the month was mixed. Agriculture emerged as the standout performer, with its business performance index jumping 9.6 points to 112.9, driven by seasonal demand and stronger activity in crop production, livestock and agro-allied segments. NESG attributed the rebound to heightened food-related business activity typical of the year-end period.
Manufacturing also recorded a modest improvement, with its index rising to 117.9 points, supported by food and beverages, textiles, plastics, paper products and electricals. However, the sector’s gains remain fragile given ongoing cost and infrastructure challenges.
By contrast, momentum slowed across trade, services and non-manufacturing sectors. Trade remained the most upbeat in absolute terms at 123.8 points, but eased from November as weak consumer demand and cautious spending offset seasonal sales. Services declined for a second consecutive month to 104.3 points, while non-manufacturing moderated to 110.2 points, reflecting lingering structural bottlenecks.
Outlook: Cautious optimism amid uncertainty
Looking ahead, optimism about near-term conditions remained positive but weakened. The Future Business Expectation Index dipped to 132.6 points in December from 134.8 in November, though it remained above its level a year earlier. Trade recorded the strongest future optimism, followed by manufacturing, while services posted the weakest outlook.
NESG said expectations are being shaped by uncertainty around policy reforms, a less supportive operating climate and potential spillovers from electoral developments.
While seasonal activity, relative exchange-rate stability and infrastructure investment provide some support, the group warned that sustaining the expansion will depend on addressing core constraints such as power supply, access to finance and policy consistency that continue to weigh on Nigeria’s business climate.