Nigeria’s business environment remained in expansion territory in March 2026, but momentum weakened significantly as rising input costs, weak investment appetite, and persistent structural challenges dragged performance across key sectors, according to the latest Nigerian Economic Summit Group Business Confidence Monitor (BCM).
The report paints a picture of a cautious economy, one where businesses are still growing but with increasing restraint amid tightening financial conditions and operational headwinds.
The BCM Current Business Performance Index declined to 101.2 points in March 2026, down sharply from 117.2 points in February, signalling a slowdown in momentum despite remaining above the 100-point expansion threshold.
Analysts attribute the slowdown to weak agricultural output and contraction in non-manufacturing industries, alongside structural constraints such as limited access to finance, erratic power supply, insecurity, and rising rental and operational costs.
While businesses are still operating in expansion territory, the decline suggests fragile growth, with firms increasingly cautious in their operations and investment decisions.
Rising Costs, Falling Investment Confidence
A key concern highlighted in the report is the decline in investment sentiment, with the investment sub-index recording a deeper contraction in March.
This reflects heightened risk perception among business owners, leading to reduced capital commitments. At the same time, rising global and domestic cost pressures, especially energy-related costs linked to geopolitical tensions, have further squeezed margins.
Although the overall cost of doing business eased slightly, input costs remain elevated, eroding profitability and limiting expansion plans.
Sectoral Performance: Uneven Recovery
Agriculture Sector Struggles
The agriculture sector recorded the weakest performance, slipping into contraction at 91.1 points from 104.8 points in February.
Crop production and livestock were particularly affected, reflecting security challenges, financing constraints, and infrastructure deficits that continue to undermine Nigeria’s food production system.
Manufacturing: Slowing but Still Expanding
Manufacturing remained in expansion at 103.4 points, though significantly lower than February’s performance.
While sub-sectors like food, beverages, chemicals, and basic metals remained active, others—including cement, plastics, and paper products—slipped into contraction.
The sector continues to battle power shortages, raw material scarcity, and limited credit access, which are driving up costs and limiting output.
Non-Manufacturing Sector Contracts
The non-manufacturing sector recorded a contraction at 98.4 points, reversing earlier gains.
Oil and gas services declined, while construction and natural gas remained in expansion but weakened. The sector continues to suffer from high costs, financing constraints, and insecurity, all of which are stifling new investments.
Services Sector Holds, but Weakens
The services sector remained resilient in expansion at 104.7 points, although it slowed compared to previous months.
Financial institutions, telecommunications, and professional services supported growth, driven by steady demand and improved financial conditions. However, rising operating costs and infrastructure gaps continue to weigh on the sector.
Trade Sector Shows Mixed Signals
Trade maintained expansion at 103.8 points, but with mixed performance.
Retail trade strengthened, while wholesale trade declined into contraction. The sector’s performance was supported by improved stockpiling and cash flow but hindered by supply chain disruptions and access to finance challenges.
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Looking ahead, the BCM Future Business Expectations Index stood at 128.0 points, indicating continued optimism—but at a reduced level compared to February.
Businesses in trade and manufacturing remain the most optimistic, while agriculture and services show weaker confidence.
However, the optimism is described as “cautious”, shaped by concerns over rising energy costs, global oil price volatility, and geopolitical tensions in oil-producing regions, particularly in the Gulf.
What This Means for Nigeria’s Economy
The March 2026 BCM signals a critical balancing act for Nigeria’s economy, as growth remains present but fragile. Investment is slowing amid rising risks, while increasing cost pressures are tightening profit margins across sectors. At the same time, longstanding structural challenges remain unresolved, continuing to hinder economic stability. For policymakers, the findings highlight the urgent need to address persistent issues such as unreliable power supply, limited access to finance, infrastructure deficits, and insecurity, all of which continue to constrain private sector expansion and broader economic growth.
As Nigeria navigates an increasingly complex global and domestic economic landscape, the private sector remains cautiously optimistic. However, without targeted reforms to ease operational pressures, the current expansion could lose further momentum in the coming months, potentially slowing broader economic recovery.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
