In January 2026, the Nigerian business environment faced a sharp deceleration as a “perfect storm” of tax reforms, fuel price hikes, and a post-festive demand slump took hold. While the economy technically remained in expansion, the latest data from the Nigerian Economic Summit Group (NESG) and the Stanbic IBTC PMI show that the private sector is now operating under extreme pressure.
The Current Business Performance Index fell to 105.8 points in January, down from 112 points in December 2025—its lowest level in half a year.
1. The Sectoral Drift: Agriculture and Trade Slip
The most concerning takeaway from the January report is the reversal of fortune for the Agriculture and Trade sectors, which both fell below the 100-point threshold into contraction territory.
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Trade (92.7 pts): Experienced the most dramatic crash, falling from 123.8 points in December. High transport costs and weak consumer purchasing power following the holidays have left traders with high inventories and low sales.
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Agriculture (99.5 pts): Slipped into contraction after a strong December. Rising costs for fertilizer, logistics, and animal feed—compounded by the new tax landscape—have dampened the output of small-scale farmers and agro-allied firms.
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Manufacturing (115.8 pts): Remained in expansion but at a slower pace. Sub-sectors like chemicals, pharmaceuticals, and plastics are struggling the most with raw material input costs.
2. The 65% Cost Spike
The “cost of doing business” index saw a staggering jump, moving from 54.7 points in December to 90.5 points in January.
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Tax Reforms: The implementation of the 2025 Tax Act has caused initial friction as businesses adjust to new VAT compliance and increased corporate levies for larger firms.
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Fuel Adjustments: Continued fluctuations in energy prices have spiked the “last-mile” delivery costs for almost every industry.
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Input Prices: Manufacturers reported that input prices jumped to 96.9 points, indicating that nearly every business in the country is paying more for electricity, credit, and materials than they were 30 days ago.
3. Divergent Data: NESG vs. CBN
Interestingly, there is a mismatch between private sector reports and official government data for the start of 2026:
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Stanbic IBTC PMI: Reported a contractionary 49.7 (anything below 50 indicates a decline), the first time in history a January PMI has been this low in Nigeria.
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Central Bank (CBN) PMI: Reported a robust 55.7, marking a “14th consecutive month of expansion.” The CBN attributes this to industrial resilience and improving supply chain efficiency.
