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The Centre for the Promotion of Private Enterprise (CPPE) has stated that the Nigerian business environment remains extremely challenging, especially for small and medium enterprises (SMEs).
According to a policy brief signed by Dr. Muda Yusuf, Chief Executive Officer of CPPE, energy, logistics and raw material costs are elevated, while weak consumer demand limits pricing flexibility, stating that the result is a tightening squeeze on margins, declining profitability and rising business vulnerability, particularly in consumer-facing sectors.
The centre said that February the 2026 Consumer Price Index (CPI) report presents a cautiously optimistic picture, with headline inflation easing marginally to 15.06% year-on-year, down from 15.10% in January and significantly lower than 26.27% a year earlier.
It stated that the report reflects a continuing disinflation trend supported by base effects, monetary tightening and stabilization in macroeconomic conditions. However, this improvement is fragile and does not yet signal a decisive turnaround in price dynamics.
According to the centre, food, transport and energy costs continue to rise at a pace that erodes purchasing power, adding that real incomes remain under severe strain, particularly for vulnerable and urban households. It argues that disinflation simply means a slower increase in prices—not a reduction in the cost of living.
However, the centre posited that the most immediate “threat to the inflation outlook is the escalation of geopolitical tensions in the Middle East, involving Iran, Israel and the United States. The conflict has already triggered a surge in crude oil prices above $100 per barrel, amid disruptions to energy infrastructure and heightened risks to global supply routes, including the Strait of Hormuz.”
The centre averred that the situation in Nigeria is leading to higher petrol and diesel prices, increased transportation and logistics costs, rising production costs across sectors, renewed exchange rate pressures, and escalating food prices driven by input and distribution costs
According to the centre, there is a high likelihood that the current disinflation trend could be reversed if the external pressures persist.
It said that Nigeria’s exposure to energy-driven inflation is intensified by structural weaknesses in the domestic economy, adding that “the heavy reliance on petrol and diesel for power generation, due to unreliable electricity supply, creates a strong and immediate pass-through from global oil prices to domestic inflation.”
It disclosed that estimates indicate that unreliable electricity imposes annual economic losses of between ₦7 trillion and ₦10 trillion, while spending on generators exceeds ₦3.7 trillion annually.
The centre argues that urgent and coordinated policy measures are required to cushion the impact of rising energy prices and sustain the fragile disinflation gains, stating that priority should be accorded to strengthening domestic refining capacity through the provision of stable and reliable crude oil supply to local refineries, including the Dangote refinery, under supportive, predictable and, where feasible, concessionary terms.
It calls on government at all levels to scale up investment in efficient and affordable public transportation systems as a key social protection measure, saying that “transport costs have become a major channel of inflation transmission, and easing this burden would provide immediate relief to households.”
The centre also said that fiscal barriers to renewable energy adoption should be removed and that waivers on import duties and taxes on solar equipment, inverters and batteries would accelerate the transition to alternative energy sources and reduce dependence on expensive fossil-fuel-based self-generation.
“Additionally, all maritime charges should be suspended to ease the escalating shipping cost amidst the sharp increase in marine insurance globally.”
CPPE posited that there is an urgent need to improve electricity supply. “Reliable power remains the most effective long-term solution to Nigeria’s energy cost crisis. Strengthening generation, transmission and distribution infrastructure, alongside support for decentralized energy solutions, would significantly reduce production costs and inflationary pressures.”
It argues that monetary and fiscal authorities must remain cautious and disciplined and that the resurgence in monthly inflation and the emergence of external shocks suggest that premature policy easing would be risky.
