Nigeria’s business recovery showed further signs of strain in April 2026 after the manufacturing sector slipped back into contraction amid financing constraints, rising operating costs, insecurity, and persistent power shortages.
The latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG) showed that the manufacturing sector’s performance index fell to 98.7 points in April from 103.4 points in March, dropping below the 100-point threshold that separates expansion from contraction. The figure was also weaker than the 108.8 points recorded in April 2025.
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The decline in manufacturing dragged on Nigeria’s broader private sector recovery even as the overall Current Business Performance Index rose slightly higher to 102.1 points from 101.2 points in March, marking a fourth consecutive month of expansion.
However, the modest improvement masked growing weakness across key productive sectors of the economy, particularly manufacturing, where firms are struggling to cope with elevated production costs and slowing investment activity.
According to the NESG report, several manufacturing subsectors recorded deteriorating conditions during the month. Textile, apparel, and footwear; cement; chemical and pharmaceutical products; and motor vehicle assembly all slipped into contraction territory. Wood products, pulp and paper, and non-metallic products also remained under pressure.
The report attributed the downturn largely to structural challenges that continue to undermine industrial productivity in Nigeria.
Manufacturers faced severe electricity supply disruptions during the month, forcing many businesses to rely heavily on expensive alternative energy sources. This significantly raised production costs at a time when firms were already grappling with elevated input prices and weak access to affordable financing.
“Limited access to credit, power supply deficit, and persistent insecurity heightened the overall cost of doing business and constrained new investments among industry players,” the report stated.
The worsening security situation across parts of the country also disrupted supply chains and increased logistics expenses for manufacturers dependent on interstate movement of raw materials and finished goods.
High borrowing costs remain another major pressure point for industrial operators. Despite moderating inflationary trends, elevated interest rates have continued to restrict access to working capital and expansion financing, discouraging fresh investments across the sector.
The NESG findings suggest that while consumer demand improved temporarily due to festive spending in April, businesses remained cautious about long-term production expansion because of uncertainty surrounding costs and operating conditions.
Outside manufacturing, performance across other sectors was mixed.
Agriculture rebounded into expansion territory, with the sector index rising to 103.2 points from 91.1 points in March, supported largely by stronger demand linked to festive activities. Crop production and livestock activities improved during the month, although insecurity, poor infrastructure, and erratic electricity supply continued to pressure operators.
The non-manufacturing sector also returned to expansion, rising to 101.6 points from 98.4 points in March, helped by improvements in crude petroleum and construction activities. However, oil and gas services remained in contraction amid rising operational costs.
Meanwhile, the services and trade sectors maintained modest expansion but lost momentum compared to previous months.
The services index eased to 101.5 points from 104.7 points in March, with broadcasting, telecoms, financial institutions, and professional services all recording softer activity levels. Real estate slipped into contraction for the first time in more than a year as elevated rental costs and tighter financing conditions weakened activity in the segment.
Similarly, the trade sector index declined to 102.7 points from 103.8 points in March. Retail trade weakened during the month, although wholesale trade recovered slightly from contraction.
Despite the weakening momentum, Nigerian businesses remained cautiously optimistic about short-term economic conditions.
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The NESG Future Business Expectation Index rose marginally to 128.6 points in April from 128.0 points in March, reflecting sustained optimism over the next one to three months. Manufacturing and trade recorded the strongest optimism levels, suggesting that firms still expect demand conditions to improve despite prevailing headwinds.
However, the report warned that geopolitical tensions in the Middle East, particularly their impact on global energy prices, could further intensify cost pressures for Nigerian businesses in the months ahead.
