Nigeria’s business environment strengthened significantly in February 2026, with the latest Business Confidence Monitor showing firms reporting the strongest operating conditions since the index was introduced.
The improvement came even as fresh data from the central bank showed banks becoming more cautious in lending to the private sector, underscoring the complex state of the economy, where business sentiment is improving but financial conditions remain tight.
The February Business Confidence Monitor released by the Nigerian Economic Summit Group (NESG) shows the Current Business Performance Index rising to a record 117.2 points. The reading marks a sharp jump from 105.8 points recorded in January 2026 and also exceeds the 111.5 points recorded in February 2025.
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The index, which measures business conditions across major sectors of the economy, indicates broad-based expansion, suggesting that firms are experiencing improved demand conditions and stronger operational performance at the start of the year.
Broad-based expansion across sectors
According to the NESG report, all five major sectors of the economy expanded in February, reflecting a synchronized improvement across production, services, and trade.
The non-manufacturing sector posted the strongest performance, with its index rising to 128.9 points from 115.3 in January, highlighting strong activity in construction, utilities, and other industrial services.
Manufacturing also recorded notable growth, with the index climbing to 121.1 points from 115.8 in the previous month. The expansion was largely driven by strong output in food, beverage, and tobacco manufacturing as well as chemical and pharmaceutical production. Pulp, paper, and paper products also recorded stronger activity during the month.
However, the data also revealed pockets of weakness within the industrial segment. Cement production, as well as plastic and rubber product manufacturing, slipped into contraction territory, pointing to uneven demand conditions within the sector.
The services sector maintained its expansion trajectory, improving to 109.2 points from 102.1 in January. Growth in services was supported by stronger activity in broadcasting, financial services, telecommunications, real estate, and information services.
Trade recorded one of the sharpest rebounds in the report, rising to 108.7 points from 92.7 in January. The improvement indicates stronger retail and wholesale activity as consumer demand showed signs of recovery after earlier weakness.
Agriculture also returned to expansion territory with a reading of 104.8 points, up from 99.5 in January. Improvements in crop production, as well as livestock and agro-allied activities, supported the recovery.
Persistent structural constraints
While the report paints a picture of strengthening business activity, it also highlights structural challenges that continue to weigh on productivity and investment.
Businesses continue to cite insecurity, poor infrastructure, high operating costs, and limited access to financing as major constraints to expansion, particularly in agriculture and manufacturing, where production is highly sensitive to logistics and input costs.
Power supply disruptions, transportation bottlenecks, and rising costs of imported inputs remain key concerns for manufacturers, many of whom are still navigating the effects of currency volatility and high interest rates.
Despite these structural hurdles, businesses remain highly optimistic about the outlook for the coming months.
The NESG Future Business Expectation Index rose to 135.5 points in February 2026, up from 124.7 points in January and 128.3 points recorded in February last year.
Manufacturing firms expressed the strongest optimism, with the sector recording an expectations index of 164.3 points. Trade followed closely at 163.1 points, reflecting expectations of stronger consumer demand and increased inventory turnover.
Non-manufacturing businesses also reported strong confidence with an index of 151.0 points. Agriculture posted 137.2 points, while the services sector recorded the lowest but still expansionary outlook at 117.1 points.
The strong expectations index suggests businesses anticipate continued improvements in demand, production, and investment activity in the near term.
Separate data compiled by S&P Global and released through the Stanbic IBTC Bank Purchasing Managers’ Index support the narrative of improving economic activity.
The PMI rose to 53.2 in February from 49.7 in January, signaling a return to expansion for Nigeria’s private sector. In PMI methodology, readings above 50 indicate improving business conditions compared with the previous month.
The data suggests companies increased output and new orders in February, pointing to strengthening economic momentum early in the year.
Bank lending shows signs of caution
However, the positive sentiment among businesses contrasts with developments in the financial sector.
New figures released by the Central Bank of Nigeria show that credit to the private sector declined in January 2026, indicating that banks remain cautious about extending loans even as economic activity begins to recover.
According to the central bank’s latest monetary and credit statistics, private sector credit fell by N590 billion to N75.24 trillion in January, down from N75.83 trillion in December 2025.
On a year-on-year basis, lending also declined compared with the N77.38 trillion recorded in January 2025.
The figures suggest that the banking sector is still adopting a conservative approach to lending, reflecting concerns about credit risks, high interest rates, and lingering economic uncertainty.
Private sector credit had previously peaked at N78.07 trillion in April 2025 before trending downward in subsequent months. The lowest level within the past year was recorded in September 2025 at N72.53 trillion, highlighting volatility in credit conditions.
The decline in private sector credit coincided with a broader moderation in liquidity across the financial system.
Net Domestic Credit fell slightly to N109.43 trillion in January 2026 from N110.06 trillion in December.
Net credit to the government also edged lower to N34.19 trillion from N34.22 trillion in the preceding month.
Nigeria’s broad money supply, measured by M3, declined to N123.36 trillion in January from N124.4 trillion in December, indicating tighter liquidity conditions within the banking system.
This tightening could partly explain the slowdown in lending, as banks balance regulatory requirements with risk management considerations.
Policy balancing act for the central bank
The credit figures come amid ongoing efforts by the central bank to strike a balance between controlling inflation and supporting economic growth.
In September 2025, the Monetary Policy Committee reduced the benchmark Monetary Policy Rate by 50 basis points to 27 per cent, marking the first easing step after a prolonged period of aggressive tightening.
The MPC retained the rate at 27 per cent in November 2025 but adjusted the interest rate corridor in a move designed to discourage banks from parking excess liquidity at the central bank.
Other key parameters remained unchanged, including the Cash Reserve Ratio of 45 per cent for commercial banks and 16 per cent for merchant banks, as well as the Liquidity Ratio at 30 per cent.
The Standing Facilities Corridor was also maintained at +50 and -450 basis points around the benchmark rate.
The policy adjustments were intended to push banks toward lending to businesses rather than holding funds in risk-free placements at the central bank.
A mixed economic picture
Taken together, the data present a mixed but cautiously positive outlook for Nigeria’s economy.
Business confidence is strengthening, and private sector activity is expanding, suggesting that companies are seeing improving demand and operational conditions.
However, the decline in private sector credit indicates that financial conditions remain tight and that banks are still careful about extending loans. This factor could slow investment and expansion if it persists.
The situation now presents the challenge of ensuring that improving business sentiment translates into sustained economic growth, supported by adequate credit flows and structural reforms that address longstanding obstacles to productivity.