Nigeria’s business climate continued to demonstrate signs of resilience, with the Business Performance Index maintaining its upward trajectory for the sixth straight month in 2025, underpinned by renewed confidence across the manufacturing sector and tempered expectations in the non-manufacturing space.
According to the June 2025 edition of the NESG-Stanbic IBTC Business Confidence Monitor (BCM) released in July, the Current Business Performance Index rose to 113.6 points, up from 109.8 in May. The index has remained well above the 100-point threshold that distinguishes expansion from contraction, signaling that Nigerian businesses, despite prevailing macroeconomic headwinds, are adapting and pushing forward.
Confidence Hits Peak Levels in 2025
The Business Confidence Measure, which gauges business expectations for future performance, surged to 134.5 points in June, the highest level recorded so far this year. This leap suggests that companies are increasingly optimistic about future growth prospects, potentially due to signs of macroeconomic stabilization, modest recovery in oil output, and early benefits from structural reforms introduced by the government.
Yet beneath this optimism, structural and systemic challenges remain entrenched. The report identifies limited access to finance as the most acute constraint confronting businesses, followed by inadequate electricity supply, foreign exchange volatility, unclear economic policies, and high rental costs. These factors continue to hinder expansion plans and operational efficiency, especially for small and medium-scale enterprises.
Manufacturing Powers Growth Amid Constraints
The manufacturing sector led all other sectors, posting an impressive index of 123.6 in June, up from 114.4 in May. This increase reflects strong performances in subsectors such as Textile, Apparel & Footwear, Cement, Plastic and Rubber Products, Wood and Wood Products, and Pulp, Paper and Paper Products. Businesses in these categories reported higher production volumes and a more stable supply chain, which collectively contributed to the sector’s strong showing.
But the sector’s momentum also recorded friction. Manufacturers face rising input costs due to shortages of raw materials, volatile electricity supply, escalating diesel prices, and a depreciating naira, which have pushed up the cost of imports and reduced profitability.
Additionally, challenges such as multiple taxation, insecurity, high import tariffs, and poor access to credit remain persistent, threatening to undermine the sector’s medium-term outlook. These issues have prompted fresh calls from stakeholders for policy intervention.
The Manufacturers Association of Nigeria (MAN) recently urged the Central Bank of Nigeria (CBN) to cut the benchmark interest rate, arguing that sustained high rates were suffocating the productive sector. At its 301st Monetary Policy Committee (MPC) meeting held July 21–22, 2025, the CBN retained the Monetary Policy Rate (MPR) at 27.5%, defying growing pressure from the real sector.
“The expectation of MAN is to have a rate cut that is supported by a robust fiscal policy framework capable of facilitating improved access to long-term loans, enhanced productivity, and sustained economic growth,” the association stated.
Non-Manufacturing Sector Sees Slower Momentum
The non-manufacturing sector maintained an index of 120.7 in June, but this marked the second month of slowing growth, falling from 122.2 in May and 123.6 in April. While the sector remains in expansion territory, the decline signals rising caution among service providers, who are contending with high operational expenses, poor infrastructure, and rising energy and transportation costs.
Sub-sectors such as Motor Vehicle and Assembly experienced downturns, even as others maintained moderate gains. Foreign exchange instability was flagged as a key concern, disrupting procurement and long-term planning.
Finance access remains a top challenge across service-oriented industries. Many businesses also lament the absence of stable, pro-business regulations and the high cost of maintaining operations in the current macroeconomic environment.
Recalibrated Framework for BCM Index
The latest edition of the Business Confidence Monitor also clarified changes to its methodology. Index points now follow a revised scale, where:
- Below 100 indicates contraction in current performance or pessimism in future expectations.
- Above 100 denotes expansion or optimism, respectively.
This recalibration aims to align Nigeria’s business confidence tracking with global standards, making it easier to benchmark the country’s economic sentiment against that of peer economies.
While the data points to growing optimism and sustained business activity in 2025, Nigeria’s fragile infrastructure, volatile currency, and high borrowing costs continue to pose significant risks. Experts warn that unless monetary and fiscal policy are realigned to address the structural weaknesses identified in the report—particularly around finance and energy—the country’s businesses may find it difficult to convert short-term confidence into long-term, inclusive growth.
The business community is cautiously optimistic, but the underlying message from the BCM is that momentum is not a substitute for stability, and real progress will depend on fixing the fundamentals.
