NESG Report Signals Broad Private Sector Recovery Despite Structural Business Pressures

By Johnson Emmanuel

Nigerian Economic Summit Group (NESG) in its ‘Nigeria Private Sector Outlook 2026: The Productivity Imperative for Nigerian Businesses’ has reported that Nigeria’s private sector remained predominantly expansionary throughout 2025, with all 14 key metrics within its Business Confidence Monitor index staying above the 100-point growth threshold despite persistent structural constraints.

According to the report, the first half of 2025 was supported by post-reform momentum, including the Central Bank of Nigeria’s foreign exchange liberalisation measures, which stabilised the naira around N1,500–N1,580 per dollar and eased import-related costs. The second quarter marked the strongest performance period, with the Financial Results Index reaching 155.4 points and Cash Flow Index peaking at 130.5 points.

The report noted that conditions weakened in July amid inflationary pressure, flooding, and operational disruptions before recovering strongly toward year-end as inflation moderated to 15.2 percent by December 2025 and the Central Bank of Nigeria reduced the policy rate to 27 percent.

DECISION HIGHLIGHT

Nigeria’s private sector is showing resilience from macroeconomic reforms, but structural productivity constraints remain deeply embedded.

DECISION MEMO

The report reflects a significant transition within Nigeria’s business environment from survival-driven adjustment toward cautious operational recovery. The broader importance lies not in isolated growth figures, but in the consistency of expansion across all 14 business-performance indicators.

The stabilisation of the foreign exchange market appears central to the recovery narrative. Currency predictability reduced import uncertainty and improved planning conditions for firms heavily exposed to imported inputs and logistics costs. This contributed to stronger production activity, improved cash flow, and more stable financial performance across much of the year.

However, the data also reveals that the recovery remains uneven and structurally fragile. The sharp deterioration in the Cost of Doing Business Index from 151.8 in April to 90.5 in December underscores the continued burden of infrastructure deficits, insecurity, energy costs, and operational inefficiencies on businesses.

The strong performance of the General Business Situation Index and Employment Index suggests that firms responded positively to improving macroeconomic stability by sustaining output and hiring activity. Yet the persistent weakness in the Investment Index indicates that financing access, particularly for small and medium-sized enterprises, remains constrained by high interest rates and preference for government securities over private-sector lending.

The report therefore presents a dual reality. Reform-linked macroeconomic stabilisation is supporting business recovery, but productivity growth remains constrained by structural inefficiencies that monetary policy alone cannot resolve.

DATA BOX

• Report: Nigeria Private Sector Outlook 2026
• Publisher: Nigerian Economic Summit Group
• BCM average (2025): 109.7 points
• General Business Situation Index average: 159.4 points
• Production Index average: 133.7 points
• Demand Condition Index average: 124.3 points
• Employment Index average: 124.3 points
• Operating Profit Index average: 118.8 points
• Cost of Doing Business Index decline: 151.8 to 90.5
• Inflation rate by December 2025: 15.2 percent
• Central Bank policy rate by year-end: 27 percent
• Naira stability range: N1,500–N1,580/$
• Peak Supply Order Index: 154.9 points
• Peak Trade Stockpiling Index: 182.5 points

WHO WINS / WHO LOSES

Winners:

• Businesses benefiting from foreign exchange stabilisation
• Firms with strong inventory and cash-flow management capacity
• Sectors able to adapt through digitalisation and operational flexibility

Losers:

• Small and medium-sized enterprises facing financing constraints
• Businesses heavily exposed to logistics, energy, and infrastructure deficiencies
• Firms vulnerable to inflation and operational disruption shocks

POLICY SIGNALS

• Foreign exchange reform is increasingly influencing business confidence outcomes
• Monetary easing is gradually supporting private-sector recovery momentum
• Structural productivity challenges remain central to Nigeria’s competitiveness debate
• Policymakers may face growing pressure to complement macroeconomic reforms with infrastructure and energy-sector improvements

INVESTOR SIGNAL

The report strengthens evidence that Nigeria’s reform-driven stabilisation efforts are beginning to improve private-sector operating conditions. Sustained expansion across key business indicators may improve investor sentiment if supported by continued currency stability and lower inflation volatility.

RISK RADAR

• Structural infrastructure deficits continue to undermine productivity
• High interest rates may sustain financing constraints for smaller firms
• Inflationary pressure could reverse gains in business confidence
• Insecurity and climate-related disruptions remain operational threats
• Recovery momentum remains heavily dependent on macroeconomic policy consistency