As Nigerian businesses prepare for a new financial year, many are struggling to stay afloat, weighed down by a hostile operating environment that has pushed several firms to the brink, TOBI AWODIPE writes.
Stakeholders have warned that survival in 2026 will depend largely on how quickly companies adapt to new economic realities and fundamentally change their operations.
Over the past year, businesses have endured severe strain, marked by macroeconomic headwinds that forced many to shut down, scale back operations or downsize their workforce. Sky-high operating costs, inflation, unstable energy prices, expensive credit, poor infrastructure, logistics bottlenecks, weakened consumer purchasing power and foreign exchange (FX) challenges combined to increase pressure on firms.
Inflation remained a dominant concern throughout the year, eroding household purchasing power while significantly increasing input costs for businesses.
Although headline inflation moderated later in the year, largely due to the rebasing exercise by the National Bureau of Statistics (NBS), easing to 14.45 per cent by November, its impact on costs and demand remains profound.
The removal of petrol subsidy and foreign exchange liberalisation, while aimed at restoring long-term fiscal sustainability, amplified short-term operational costs, particularly for logistics-dependent sectors and manufacturers. Structural challenges such as insecurity and supply-side constraints also persisted, further raising the cost of doing business.
Adding to the uncertainty are new tax laws scheduled to take effect on January 1, 2026, a development that has heightened anxiety in the already overburdened private sector.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the confluence of FX reforms, rising energy costs, inflationary pressures, fiscal tightening and tighter global capital flows is permanently reshaping how profits are generated in Nigeria.
“In this new reality, business success will no longer be driven by speculative trading, arbitrage or import-dependent margins. It will be defined by companies that deliberately build resilience into their operations, revenue models and capital structures,” Yusuf explained.
Projecting into 2026, he said inflation is expected to moderate gradually, but cost pressures will remain elevated in the short to medium term, continuing to squeeze consumer demand and raise operating expenses. FX liberalisation, he added, has exposed firms to global capital pricing, currency volatility and higher financing costs.
“Energy has emerged as perhaps the single most important competitiveness factor,” Yusuf noted. “With unreliable grid supply and rising fuel costs, power is now the largest cost item for many manufacturers, telecom operators, logistics firms and service providers. Firms that fail to integrate energy security into their operating model face structurally weaker margins.”
According to him, the next wave of corporate winners will be firms closer to production, processing and essential service delivery – those earning foreign exchange, substituting imports or providing indispensable services such as food, housing, healthcare, power, logistics and digital infrastructure.
Yusuf observed that resilient companies are embedding FX protection into contracts and pricing models, investing in renewable energy to stabilise costs, shifting from discretionary consumer segments to essential goods, and favouring long-term, annuity-style revenue streams. Increasingly, such firms are also partnering with development finance institutions to access longer-tenor, lower-cost capital.
He said: “Businesses that control or have priority access to infrastructure enjoy lower costs, higher reliability and stronger pricing power. In Nigeria’s new business reality, the future belongs to companies built not just to grow, but to endure.”
The National President of the Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, challenged business owners to first recognise the limits of government intervention and focus on what they can control.
“We must stop doing business the old way,” he said: “Technology, innovation and creativity are no longer optional. Businesses must respond to what the market demands – smaller packaging, tiered pricing, flexible services. Physical spaces may now be liabilities rather than assets.”
Egbesola urged MSMEs to explore export opportunities aggressively, noting that Nigeria’s weakened naira has made locally produced goods more competitive globally. He lamented that businesses have yet to fully leverage the African Continental Free Trade Agreement (AfCFTA).
“Before chasing Europe and America, let us explore our neighbouring African markets where tariffs are minimal,” he said, adding that the government must remove export barriers and strengthen logistics, while businesses take deliberate steps to explore regional trade.
On energy, he advised entrepreneurs to seek alternatives to the national grid, which he described as unreliable and expensive. “Businesses have been forced onto Band A without receiving the promised supply. In many cases, owning alternative energy sources is cheaper and more reliable,” he said.
He also criticised the high cost of credit, describing interest rates nearing 40 per cent as “anti-business.” According to him, access to finance remains the biggest constraint facing MSMEs, which are the backbone of economic growth.
Egbesola encouraged businesses to explore alternative funding sources such as crowdfunding, partnerships and the Nigerian Exchange’s newly created Growth Board. He also advised strategic collaborations to reduce production and distribution costs.
On the new tax laws, he warned that the timing and implementation could hurt MSMEs, many of which are informal and poorly informed. He advocated phased implementation and pilot schemes, cautioning that forcing uninformed businesses into the tax net could worsen their challenges rather than provide relief.
With about 87 per cent of Nigeria’s estimated 40 million MSMEs operating at nano and micro levels, Egbesola stressed that awareness, capacity building and gradual implementation are critical.
