Business activity in Nigeria strengthened in July 2026 despite mounting cost pressures, with firms recording stronger performance across major sectors even as limited access to finance, energy shortages and infrastructure deficits continued to weigh on operations.

This is according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG), which showed that the overall Current Business Performance Index rose to 108.6 points in July from 104.6 points in June, and was also higher than 105.4 points recorded in July 2025.

The report attributed the improved business climate to broad-based expansion across the economy, led by the non-manufacturing sector, while noting that businesses remained burdened by limited access to finance, energy shortages, high rental costs, insecurity and poor infrastructure.

According to the NESG, most key business indicators, including production, demand conditions, operating profit, financial results, cash flow, employment and supply orders, remained in expansion territory during the month. However, investment continued to contract, while access to credit weakened slightly, underscoring the financing challenges confronting businesses.

The report also noted that the cost of doing business and input costs increased compared with the previous month, keeping operating expenses elevated and discouraging fresh investments despite stronger business activity.

Sectoral performance showed the Non-Manufacturing sector leading growth with a Business Performance Index of 116.6 points, driven by stronger activity in crude petroleum, natural gas and oil and gas services.

The Manufacturing sector also remained in expansion, with its index rising to 110.5 points from 106.4 points in June. Growth was supported mainly by the cement, textile, apparel and footwear, chemical and pharmaceutical industries, although several subsectors, including motor vehicle assembly, plastics and rubber products, contracted during the month. Manufacturers continued to grapple with irregular electricity supply, credit constraints, shortages of raw materials and inadequate infrastructure.

In the Agriculture sector, the Business Performance Index climbed to 110.8 points from 103.9 points in June, supported by favourable rainfall and early harvests that boosted crop production. Nevertheless, insecurity, energy shortages, inadequate infrastructure and poor access to finance remained key challenges for operators.

The Services sector returned to expansion after months of weakness, posting an index of 108.3 points, driven by improved performance in financial institutions, real estate and professional services. However, telecoms and information services slipped into contraction, while businesses continued to cite power outages, regulatory uncertainty and financing constraints as major concerns.

Meanwhile, the Trade sector recorded only marginal growth, with its index rising to 102.8 points from 102.0 points in June. The NESG said wholesale and retail trade remained under pressure from energy shortages, logistics bottlenecks, regulatory constraints and restricted access to credit, limiting job creation and new investments.

Looking ahead, Nigerian businesses remained optimistic about short-term prospects, although sentiment softened slightly. The Future Business Expectations Index stood at 128.3 points in July, down marginally from 128.4 points in June. Trade and manufacturing firms expressed the strongest optimism, while agriculture and services recorded the weakest outlook.

The NESG said the cautious optimism reflects concerns that rising energy costs—particularly following the shift to dollar-denominated petrol pricing by the Dangote Refinery—could sustain inflationary pressures and increase operating costs in the months ahead.