Rising taxes and recent fuel price adjustments slowed business activity in Nigeria in January 2026, dragging overall confidence to its lowest level in six months, according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG).
The report showed that the Current Business Performance Index fell to 105.8 points in January, down from 112.0 points in December 2025. Although the reading remained above the 100-point benchmark that signals expansion, it marked the weakest performance recorded in the past six months.
NESG attributed the moderation in activity to rising operational costs, subdued consumer demand following the festive period, and the cumulative effect of new tax measures alongside higher energy prices.
A breakdown by sector revealed widespread weakness across the economy. Agriculture and Trade slipped into contraction, posting index readings of 99.5 points and 92.7 points, respectively, compared with 112.9 points and 123.8 points in December. Manufacturing and Services stayed in expansionary territory at 115.8 points and 102.1 points, but both sectors experienced slower growth month-on-month. The Non-manufacturing sector was the only segment to maintain relatively stronger momentum during the period.
According to the report, all major BCM sub-indices—including general business conditions, production levels, demand, investment activity, financial conditions, supply orders, inventory accumulation, access to credit, and cash flow—declined from their December levels. NESG noted that this broad-based slowdown reflects a typical post-festive moderation, intensified by persistent structural constraints within the economy.
Cost pressures escalated sharply during the month. The cost of doing business index surged to 90.5 points in January from 54.7 points in December, while the input prices index jumped to 96.9 points from 68.9 points. NESG described the situation as a “perfect storm” caused by tax reforms, fuel price adjustments, and lingering inflationary pressures, all of which compressed profit margins and limited business expansion.
The report further noted that companies continued to struggle with restricted access to finance, unreliable electricity supply, and rising commercial real estate costs, factors that weakened investment appetite and constrained output growth across sectors. These challenges, NESG said, have heightened operational risks and reduced firms’ ability to scale production and employment.
Meanwhile, the Future Business Expectation Index, which tracks short-term outlook over one to three months, eased to 124.7 points in January from 132.6 points in December, marking the second consecutive monthly decline. Despite the moderation, all sectors remained optimistic about future conditions, though at varying levels.
NESG concluded that sustained implementation of economic reforms—without policy reversals—would improve stability and enable Nigerian businesses to strengthen resilience, drive growth, and enhance performance in the coming months.
