By Kingsley Benson
Nigeria’s manufacturing sector recorded the strongest business performance among major sectors in August 2026, as broader economic activity continued to expand despite persistent constraints around power, financing, infrastructure and operating costs.
The latest Business Confidence Monitor (BCM) of the Nigerian Economic Summit Group (NESG) showed that the Current Business Performance Index (CBPI) rose to 112.7 points in August, compared with 108.6 points in July and 107.3 points in August 2025.
The improvement points to a broadening of business activity across the economy, although the strength of the expansion varied considerably between sectors.
Manufacturing emerged as the strongest performer. Its CBPI climbed sharply to 120.4 points in August from 110.5 points in July, while also recording a significant improvement from the 106.2 points recorded in August 2025.
According to the NESG, the manufacturing expansion was broad-based, with Food, Beverage and Tobacco as well as Chemical and Pharmaceutical Products among the leading subsectors.
Textile, Apparel and Footwear also remained in expansion and performed better than in July, while cement maintained an elevated level despite a marginal decline.
Several subsectors that had contracted in July also moved into expansion territory during August. They included plastics and rubber products, pulp, paper and paper products, wood and wood products, and motor vehicles and assembly.
The NESG said the development indicated a wider improvement in manufacturing activity rather than growth concentrated in a few industries.
However, the expansion was not uniform. Electrical and electronics moved into contraction, while non-metallic products remained in contraction despite a marginal improvement. Basic metal, iron and steel also eased slightly but remained in expansion.
The strongest performance therefore came alongside significant pressure on manufacturers.
“Many industry players faced growth-inhibiting constraints, including an inadequate power supply, a shortage of raw materials, high rental costs, and limited access to financing, which heightened cost pressures during the month,” the NESG report stated.
The combination of stronger activity and persistent operating constraints presents a mixed picture for the sector. Manufacturers appear to be expanding despite structural weaknesses that continue to increase the cost of production.
Agriculture also remained in expansion, although its pace moderated slightly. The sector’s CBPI declined marginally to 110.5 points in August from 110.8 points in July. It was, however, substantially higher than the 95.6 points recorded in August 2025.
The NESG attributed the sector’s resilience to positive expansion across most subsectors. Livestock and fishing recorded stronger activity than in July, supported by improved output conditions.
Crop production remained at an elevated level, while agro-allied activity eased slightly but stayed within expansion territory. Forestry, however, declined to the neutral 100-point threshold.
Agricultural businesses continued to contend with limited access to finance, inadequate power and infrastructure bottlenecks, all of which kept operating costs high.
The non-manufacturing sector presented a different picture. Its CBPI declined to 109.7 points in August from 116.6 points in July, largely because of a reversal in crude petroleum activity.
Crude petroleum, which had been a major driver of expansion in the sector in July, moved into contraction in August. Oil and gas services also recorded weaker performance.
Services, by contrast, continued their recovery. The sector’s CBPI increased to 112.4 points from 108.3 points in July and 103.7 points in August 2025.
Trade also strengthened considerably during the month, with its CBPI rising to 112.0 points from 102.8 points in July, although the figure remained below the 114.1 points recorded a year earlier.
The August figures suggest that Nigeria’s business environment is gaining momentum, but the quality and durability of that expansion will depend heavily on whether businesses can overcome the structural constraints weighing on production.
For manufacturing in particular, the gap between stronger business activity and difficult operating conditions remains significant. Rising output is encouraging, but inadequate electricity, limited financing, raw-material shortages, high rents and infrastructure weaknesses continue to erode margins.
The manufacturing sector’s 120.4-point reading therefore carries a more important message than a simple improvement in business confidence. It shows that businesses are responding to improving demand and market opportunities, but they are doing so within an environment where the cost of converting that opportunity into sustained production remains high.
The next test will be whether the current expansion can be sustained and translated into higher productive capacity, stronger investment and more jobs. For policymakers, the August data reinforces the need to address the constraints that continue to stand between business activity and more durable economic growth.
