Business confidence in Nigeria edged higher in May 2026 as improved consumer spending provided short-term support to private sector activity, even as structural weaknesses continued to weigh on broader economic performance, according to the latest Nigerian Economic Summit Group (NESG) Business Confidence Monitor (BCM).
The BCM Index rose to 104.6 points in May from 102.1 points in April, reflecting a modest expansion in business activity across key sectors. However, analysts caution that the recovery remains uneven, heavily dependent on seasonal demand rather than sustained improvements in underlying economic fundamentals.
The latest reading also underscores a year-on-year softening in sentiment, as the index remains below the 109.8 points recorded in May 2025.
A key driver of the monthly improvement was increased consumer spending during the festive season, which boosted activity in trade, services and selected manufacturing segments. Retail turnover rose in response to higher household consumption, providing temporary relief to businesses navigating a challenging cost environment.
However, the data points to a patchwork recovery rather than broad-based expansion, with significant divergence across sectors.
Manufacturing emerged as the strongest performer in May, rising to 114.1 points from 98.7 points in April and moving firmly into expansion territory. The sector benefited from seasonal demand for food products, beverages, textiles and basic consumer goods, which helped offset persistent production constraints.
Agriculture, by contrast, slipped deeper into contraction, falling to 97.5 points from 103.2 points in the previous month. The decline reflects ongoing insecurity in key farming regions, rising input costs and persistent infrastructure bottlenecks that continue to limit production and distribution capacity.
The non-manufacturing sector also weakened, easing to 99.4 points from 101.6 points, signalling contraction. High operating costs, unreliable power supply and tighter credit conditions were identified as major constraints affecting business expansion and operational efficiency.
In contrast, the services and trade sectors recorded moderate improvements, with services rising to 103.5 points and trade climbing to 105.5 points. Both sectors remained in expansion territory, supported primarily by short-term demand spikes linked to festive-season consumption patterns.
Despite the headline improvements in select sectors, analysts note that the recovery lacks strong structural backing, with businesses still struggling with infrastructure gaps, elevated borrowing costs, foreign exchange pressures and inconsistent policy transmission.
Manufacturers, in particular, continue to operate under significant constraints despite improved output levels. Persistent challenges around electricity supply, raw material shortages, logistics inefficiencies and limited access to credit have continued to suppress investment and raise production costs, even in periods of stronger demand.
The NESG noted that the current recovery pattern is characterised by cyclical demand support rather than productivity-driven expansion, raising concerns about sustainability once seasonal effects fade.
“While sectoral performance shows pockets of resilience, the overall recovery remains fragile and uneven,” the report suggests, pointing to structural bottlenecks that continue to limit broad-based growth.
Forward-looking indicators, however, indicate that businesses remain cautiously optimistic about near-term prospects. The NESG Future Business Expectation Index stood at 127.0 points in May 2026, reflecting sustained confidence in the short-term outlook despite current operational challenges.
The optimism is partly anchored on expectations of improved consumer demand conditions, gradual easing of inflationary pressures and continued policy reforms aimed at stabilising macroeconomic fundamentals.
Recent national output data appears to support this cautiously positive outlook. The National Bureau of Statistics (NBS) reported that Nigeria’s economy grew by 3.89 percent year-on-year in real terms in the first quarter of 2026, driven largely by non-oil sector performance, even as oil production volumes moderated.
In nominal terms, aggregate GDP rose to N110.79 trillion in Q1 2026 from N94.05 trillion in the same period last year, underscoring the scale of economic activity despite persistent structural inefficiencies.
