Nigeria’s business environment sustained its expansion in August, but rising operating costs, inadequate electricity supply, financing constraints, and other structural bottlenecks increasingly overshadowed the improvement and threatened the sustainability of growth.

The latest Business Confidence Monitor (BCM) of the Nigerian Economic Summit Group (NESG) showed that the Current Business Performance Index rose to 112.7 points in August from 108.6 points in July, representing an increase of nearly five per cent. The index stood at 107.3 points in August 2025.

The manufacturing sector led the broad-based expansion, while agriculture, services and trade also remained in expansion territory.

However, the report revealed that the improvement in business activity had yet to translate into a corresponding easing of the operating environment, as firms continued to contend with high costs, unreliable power supply, limited access to finance, insecurity, expensive rents and infrastructure bottlenecks.

Of particular concern was the continued deterioration in the cost environment.
The NESG said the Cost of Doing Business Index stood at 56.7 points, while the Prices sub-index was 58.7 points, both substantially below the critical 100-point neutral threshold.

Readings below 100 indicate that a net majority of businesses are experiencing rising costs and producer prices.

The NESG noted that both indicators declined from their previous-month levels, signalling that cost and price pressures intensified further in August.

The development points to a growing disconnect in the economy, with businesses reporting stronger activity while operating under increasingly difficult cost conditions.

Manufacturing recorded the greatest improvement among the major sectors, with its Current Business Performance Index jumping to 120.4 points in August from 110.5 points in July and 106.2 points a year earlier.

The expansion was broad-based, with food, beverage and tobacco, as well as chemical and pharmaceutical products, recording particularly strong performances.

Several subsectors that contracted in July also returned to expansion in August, including plastic and rubber products, pulp, paper and paper products, wood and wood products, and motor vehicles and assembly.

Manufacturers continued to identify inadequate power supply, shortages of raw materials, high rental costs and limited access to financing as major constraints.
The NESG also said regulatory requirements and insecurity were discouraging fresh investment and slowing business expansion.

The trade sector also recorded a significant improvement, with its performance index rising to 112 points from 102.8 points in July.

But the headline recovery concealed a sharp divergence within the sector.

Wholesale trade surged to 136.8 points, while retail trade plunged into contraction at 87.3 points.

The development suggests that while businesses involved in bulk distribution experienced stronger activity, consumer-facing retail businesses remained under pressure.

The report also pointed to increased trade stockpiling, as businesses accumulated inventories ahead of back-to-school shopping, supported by firm consumer demand.
Yet, traders continued to face limited access to credit, incessant power outages and high rental costs.

Agriculture remained resilient, although its performance edged down marginally.

The sector’s index fell from 110.8 points in July to 110.5 points in August, but remained significantly above the 95.6 points recorded in August 2025.