Taxes, fuel price hikes drag business confidence to six-month low – NESG
Story by Martha Gwary
Business growth in Nigeria slowed markedly in January 2026 as rising taxes and fuel price adjustments increased operating costs and dampened confidence, according to the latest Business Confidence Monitor (BCM) report released by the Nigerian Economic Summit Group (NESG).
The report revealed that the Current Business Performance Index fell to 105.8 points in January from 112.0 points in December 2025, its lowest level in six months. Although the index remained above the 100-point benchmark that separates expansion from contraction, the decline signalled a clear loss of momentum across the economy.
NESG attributed the slowdown to mounting cost pressures, weak post-festive consumer demand and the combined impact of new tax measures and higher energy prices on business operations.
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A breakdown by sector showed a broad-based weakening in activity. Agriculture and Trade slipped into contraction, posting 99.5 points and 92.7 points respectively, compared with 112.9 points and 123.8 points in December.
Manufacturing and Services stayed in expansion territory at 115.8 points and 102.1 points, but both recorded slower growth than in the previous month. The Non-manufacturing sector emerged as the only segment to maintain relatively stronger expansionary momentum.
The NESG noted that all major BCM sub-indices—including general business conditions, production levels, demand, investment, financial conditions, supply orders, trade inventories, access to credit and cash flow—declined compared with December 2025.
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According to the group, this widespread moderation reflects the typical post-festive slowdown, compounded by persistent structural challenges facing Nigerian businesses.
Cost pressures intensified sharply during the period under review. The cost of doing business index surged to 90.5 points in January from 54.7 points in December 2025, while the input prices index climbed to 96.9 points from 68.9 points. NESG described the development as a “perfect storm” caused by new tax reforms, fuel price adjustments and the lingering effects of inflation, all of which eroded profit margins and constrained business activity.
The report further highlighted ongoing challenges such as limited access to finance, unstable power supply and rising commercial property costs, which continue to discourage investment and weigh on performance across sectors. These factors, NESG said, have heightened operational risks and reduced firms’ capacity to expand production and employment.
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Meanwhile, the Future Business Expectation Index, which measures business outlook over the next one to three months, eased to 124.7 points in January from 132.6 points in December 2025, marking the second consecutive month of declining confidence. Despite the moderation, all sectors remained optimistic about future conditions, though to varying degrees.
NESG concluded that sustained implementation of government reforms, without policy reversals, would help businesses leverage greater stability for growth, resilience and improved performance in the months ahead.
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