NESG: Nigeria’s business environment expands to 104.6 in May
Nigeria’s business environment recorded its fifth consecutive month of expansion in May 2026, that’s according to the latest Business Confidence Monitor from the Nigerian Economic Summit Group. The Current Business Performance Index rose by 2.5 points month-on-month to 104.6, supported by stronger activity in manufacturing, services and trade. Manufacturing rebounded sharply from contraction in April, helping to drive overall business performance. Wasiu Adekunle, Economist at the Nigerian Economic Summit Group, joins CNBC Africa to unpack the report.
Thu, 04 Jun 2026 15:18:11 GMT
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Key Points:
- Nigeria’s Current Business Performance Index rose by 2.5 points month on month to 104.6 in May 2026.
- The May reading marked the fifth consecutive month of expansion in Nigeria’s business environment.
- Manufacturing returned to expansionary territory, while services and trade also improved.
- Agriculture and non-manufacturing contracted in May, showing the recovery remains uneven.
- NESG economist Wasu Adekunle said the latest expansion is weaker than earlier peaks, especially February’s roughly 117-point reading.
- High fuel prices, rental costs, insecurity and power outages are raising the cost of doing business.
- Businesses are increasingly relying on alternative energy sources, adding to operating expenses.
- The Future Expectations Index showed stronger optimism in manufacturing and trade over the next one to three months.
- Agriculture could recover in June or July, supported by the early crop harvest season between June and August.
- Rising business costs may lead to stagnation in employment growth if firms are unable to raise wages or expand payrolls.
- Access to finance remains one of the top constraints for Nigerian businesses, according to both NESG and World Bank survey findings.
- The report underscores the need for reforms targeting electricity, security, inflation and credit access to sustain business confidence.
Topics
Nigeria business environmentNESGBusiness Confidence MonitorNigeria economymanufacturing Nigeriatrade sector Nigeriaservices sector Nigeriaagriculture Nigeriacost of doing businessaccess to finance Nigeriaemployment outlook Nigeriainflation Nigeria
Nigeria’s business environment extended its expansion streak to a fifth consecutive month in May 2026, according to the latest Business Confidence Monitor from the Nigerian Economic Summit Group, underscoring continued resilience in private sector activity even as businesses grapple with elevated operating costs
The NESG said the Current Business Performance Index rose by 2.5 points month on month to 104.6 in May, with the improvement driven largely by stronger activity in manufacturing, services and trade. A reading above 100 signals expansion
Still, the latest gain masks a more fragile recovery when measured against earlier momentum and year-ago levels. Speaking in a television interview on the report, NESG economist Wasu Adekunle said the latest expansion, while positive, remained weaker than the stronger readings seen earlier in the year, particularly in February when the index stood around 117 points
That softer pace, he said, reflects the mounting pressure of business costs across the economy
According to Adekunle, firms are contending with multiple headwinds at once, including high fuel prices, rising rents, insecurity and persistent power outages that are forcing many businesses to rely on alternative energy o global developments, citing fallout from the Middle East crisis as a factor feeding into cost conditions
The result is a business climate that is still expanding, but only narrowly and under strain
“Businesses face huge pressures,” Adekunle said, noting that the increase in the index was “very, very fragile” compared with previous months
The sector breakdown in the May report pointed to an uneven recovery. Manufacturing returned to expansionary territory, offering a potentially important signal for industrial activity after prior weakness. Services and trade also posted improvements, helping to support the headline index
Even so, the near-term outlook captured in the NESG’s Future Expectations Index suggests that businesses remain cautiously optimistic over the next one to three months. Adekunle said manufacturing and trade recorded the highest levels of optimism in the forward-looking measure, indicating that firms in those sectors expect stronger activity ahead
Agriculture, despite its May contraction, is also expected to improve in the coming months. Adekunle pointed to the early crop harvest window between June and August as a likely support for a rebound in sector performance, raising the possibility of a recovery as early as June or July
That outlook matters for an economy seeking stronger non-oil momentum and broader job creation. But economists say optimism alone may not be enough if inflationary and structural constraints continue to squeeze businesses
One of the clearest risks highlighted in the interview was the effect of rising operating costs on hiring. Adekunle said Nigeria’s wage structure does not typically adjust automatically in line with inflation or living-cost increases, meaning companies are unlikely to raise wages significantly even as costs rise
In practical terms, that could translate into subdued labor market outcomes over the coming months
“If not a decline in employment, we will see some kind of stagnation in employment growth,” he said
That assessment comes at a time when wage adequacy and living costs remain at the center of policy debates involving labor unions and state governments. For businesses, however, the challenge is balancing payroll decisions against already stretched operating expenses
Another major obstacle is financing. Adekunle described access to finance as one of the most serious constraints facing businesses in Nigeria today, reinforcing a long-running complaint from firms across sectors. He noted that the issue is not only reflected in the NESG survey but also echoed in the World Bank’s Enterprise Survey 2025, where access to finance ranked among the top five obstacles for Nigerian businesses.
Limited credit availability, high borrowing costs and tighter financial conditions can weigh heavily on expansion plans, especially for small and medium-sized enterprises that often lack the buffers to absorb sustained increases in energy, logistics and rent expenses
Taken together, the May data present a mixed picture for Africa’s largest economy. On one hand, the continued expansion in the business environment suggests that firms are still finding room to grow despite difficult conditions. On the other, the moderation from earlier peaks and the uneven sector performance point to a recovery that remains vulnerable to domestic and external shocks
For policymakers, the latest reading may reinforce the urgency of tackling the structural issues repeatedly cited by businesses: unreliable electricity supply, insecurity, inflation, and constrained access to affordable finance. Without progress on those fronts, business confidence may remain positive but shallow
The May reading of 104.6 therefore signals not just expansion, but endurance. Nigerian businesses are still pushing forward, led by manufacturing, services and trade, yet the sustainability of that momentum will likely depend on whether cost pressures ease and whether financing conditions improve enough to support investment, employment and broader-based growth in the months ahead
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