Nigeria’s manufacturing sector expanded slower in January 2026 as rising costs, weak demand, and structural challenges hit chemicals, pharmaceuticals, plastics, and rubber sub-sectors took huge toll on the performance of the real sector.
The latest NESG–Stanbic IBTC Business Confidence Monitor (BCM) showed that while overall business conditions improved in the real sector, momentum remarkably weakened during the month under review.
The report reflected that Current Business Performance Index fell to 105.8 points in January, down from 112.0 points in December 2025, representing its lowest level in six months but slightly above the 105.7 points recorded in January 2025.
According to the BCM report’s findings, the sectoral performance showed non-manufacturing activities sustaining growth even as manufacturing and trade faced headwinds as rising operational costs, weak post-festive demand, and broader infrastructural constraints continued to dampen investor confidence across key sectors.
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Specifically, the January BCM data highlighted a broad-based slowdown across the economy, with varying sectoral impacts.
While the manufacturing sector eased to 115.8 points from 117.9 points in December 2025, Services declined to 102.1 points from 104.3 points, though both sectors remained in expansion territory, Agriculture slipped into contraction at 99.5 points, down sharply from 112.9 points, and Trade fell further into contraction at 92.7 points from 123.8 points in December.
Overall, the data indicated that post-festive moderation, cost pressures, and weak consumer demand are key drivers of the slowdown.
According to the NESG, rising business costs emerged as a major constraint in January, compounding structural challenges.
For instance, the cost of doing business surged to 90.5 points from 54.7 points in December, while input prices jumped to 96.9 points from 68.9 points due to what the NESG described as a combination of new tax reforms, fuel price adjustments, and lingering inflationary pressures.
Other constraints to business performance as listed by the business group were limited access to finance, unreliable power supply, rising commercial property costs, and poor infrastructure, all of which continue to discourage investors to stake their funds in the economy.
