Onome Amuge
Nigeria’s private sector ended 2025 with renewed momentum, offering a cautiously optimistic signal that Africa’s most populous country may be finding firmer ground after a prolonged period of macroeconomic stress. Business activity expanded for a thirteenth consecutive month in December, driven by resilient consumer demand and improved confidence among firms, even as inflationary pressures and tight financial conditions continued to shape operating decisions.
Data from the latest Stanbic IBTC Purchasing Managers’ Index showed business conditions improving for the thirteenth straight month, with activity rising to a 13-month high during the festive season. While the pace of expansion moderated slightly from November, the sustained run of growth underscores a notable shift in private-sector sentiment compared with the volatility that characterised much of 2023 and early 2024.
Rather than a broad-based boom, the latest expansion reflects targeted resilience. Stronger customer demand, particularly linked to year-end spending, drove new orders higher for a fourteenth consecutive month, encouraging firms to lift output and rebuild inventories. Companies across agriculture, manufacturing, services and trade all reported higher production levels, suggesting that growth was not confined to a single segment of the economy.
For businesses, the return of demand has been as significant psychologically as it has been operational. After years of dealing with currency instability, supply-chain disruptions and sharply rising costs, firms appear increasingly willing to plan beyond the short term. Business confidence climbed to a six-month high in December, with nearly six in 10 respondents expressing optimism about future activity. Many cited plans to expand operations, open new branches and increase export capacity, signals that indicate corporate Nigeria is tentatively shifting from survival mode to cautious expansion.
Employment trends, however, highlight the limits of the recovery. While companies continued to add staff, the pace of job creation slowed to its weakest since mid-2025. Executives remain wary of committing to large payroll expansions amid high borrowing costs and lingering uncertainty over consumer purchasing power. This caution reflects a broader theme in Nigeria’s recovery: firms are growing output and sales, but doing so with tight cost controls and measured risk appetite.
Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank, cautioned that while the PMI remains firmly positive, the pace of growth has moderated.
“The December PMI reading moderated for the second consecutive month, although it remained in growth territory and broadly in line with the 2025 average,” he said.
Oni noted that continued expansion was underpinned by stronger customer demand, which supported new orders and encouraged firms to increase purchasing and inventory levels. But he also pointed to renewed cost pressures.
Oni projects monthly inflation of about 1.44 per cent for December, implying an annual inflation rate of 32.34 per cent. While elevated, this represents a moderation from earlier peaks and suggests that price pressures may be losing momentum.
From a macroeconomic perspective, the steady improvement in private-sector activity supports expectations that Nigeria’s economy is gradually transitioning from stabilisation toward expansion. Stanbic IBTC forecasts economic growth of about 3.8 per cent in 2025, accelerating to just over 4 per cent in 2026, underpinned by stronger manufacturing and services output, infrastructure development and improving trade conditions.
Crucially, expectations for 2026 hinge on factors beyond domestic demand alone. Lower interest rates, greater exchange-rate stability and the expanding role of the Dangote refinery in domestic fuel supply are expected to ease cost pressures, support investment and improve foreign exchange availability. For manufacturers and service providers, these developments could reduce operational uncertainty and improve planning horizons.
However, risks remain pronounced. High inflation, tight monetary policy and weak job growth continue to constrain household spending, while security concerns and infrastructure gaps weigh on productivity.
