By Kingsley Benson
Nigeria’s business environment strengthened in July, but rising operating costs are leaving companies cautiously optimistic about whether the improvement can be sustained.
The Nigerian Economic Summit Group (NESG), in its August 2026 Business Confidence Monitor, reported that business activity expanded more strongly during the month, with the overall Current Business Performance Index rising to 108.6 points from 104.6 points in June and 105.4 points in July 2025.
The improvement was broad-based, with Non-Manufacturing recording the strongest expansion. The NESG said: “Nigeria’s business environment recorded stronger expansion in July 2026. The overall Current Business Performance Index stood at 108.6 points, up from 104.6 points in June 2026 and 105.4 points in July 2025. This was driven by broad-based expansion across subsectors led by Non-Manufacturing.”
The improvement suggests that businesses are operating in a somewhat stronger environment than a year earlier. But the underlying conditions remain difficult, particularly for firms facing high input and operating costs.
On the main constraints confronting businesses, the group stated: “Key constraints persisted, especially limited access to finance, energy shortages, high rental costs, insecurity, and infrastructural challenges during the month.”
The combination of stronger activity and persistent constraints creates a mixed picture. Businesses are expanding, but the cost of maintaining that expansion remains significant.
The outlook reflects that tension. The Future Business Expectations Index stood at 128.3 points in July, virtually unchanged from 128.4 points in June. The NESG described the marginal movement as evidence of continuing, though measured, confidence.
“The Future Business Expectations Index stood at 128.3 points in July 2026, declining marginally from 128.4 in the previous month. This reflects sustained but cautious optimism about short-term business conditions,” the report said.
Confidence was not evenly distributed across the economy. Trade and Manufacturing recorded the strongest optimism, while the cautious outlook reflected concerns that higher energy costs could place additional pressure on businesses in the months ahead.
“Sentiment was uneven across sectors, with Trade and Manufacturing recording the strongest optimism during the month. The cautious outlook reflects renewed cost pressures that could result from elevated energy prices in the coming months,” the NESG said.
The broader business indicators also pointed to improvement. According to the report, all sectors except Services remained in expansion territory, although Services itself moved into expansion during the month.
“All sectors except Services remained in the expansion territory. Remarkably, Services moved into the expansion region during the month. Key BCM sub-indices, including general business situation, production, demand conditions, operating profit, financial results, supply order, access to credit, cash flow, and employment, remained in the expansion territory,” the report noted.
However, stronger operating conditions have not yet translated into a broader investment revival. The NESG said investment remained in contraction territory, even as other indicators improved.
“The access-to-credit index recorded only a marginal decline. Notably, sub-indices including export and trade stockpiling expanded during the month, whereas investment remained in the contraction territory,” it said.
That divergence is significant. Businesses may be experiencing stronger demand and improved operating conditions, but continued financing constraints can limit their willingness or ability to commit capital to new capacity.
The NESG’s principal concern is therefore the sustainability of the recovery. It warned that energy costs could become a more significant constraint following the recent shift to dollar-denominated petrol pricing by Dangote Refinery.
“The cautious optimism signals firms’ concerns over cost pressures that could emanate from the recent shift to dollar-denominated petrol pricing by the Dangote Refinery, which could keep energy prices elevated in the coming months,” the group warned.
The July data consequently presents a business sector that is expanding, but not yet sufficiently confident to commit fully to investment. The central challenge is whether improved business activity can withstand higher energy costs, limited credit and persistent infrastructure constraints without losing momentum.
