Nigeria’s Business Confidence Climbs for Sixth Month in a Row as Manufacturing Powers Recovery

Nigeria’s business environment has continued to show encouraging signs of resilience and gradual recovery, as confidence among businesses grew for the sixth consecutive month in 2025. The country’s Business Performance Index (BPI) has remained above the critical threshold, highlighting steady optimism across industries, particularly in the manufacturing sector which is now leading the charge.

These findings were revealed in the latest June 2025 edition of the Business Confidence Monitor (BCM) report, jointly released by the Nigerian Economic Summit Group (NESG) and Stanbic IBTC. The BCM serves as a monthly pulse check on how Nigerian businesses are performing and what they expect in the months ahead.

According to the report, the Current Business Performance Index rose to 113.6 points in June, up from 109.8 points recorded in May. This steady increase signals continued expansion, especially since any score above 100 is seen as a positive trend, while anything below suggests contraction.

Business optimism for the future is also growing rapidly. The Business Confidence Measure, which assesses how businesses feel about what lies ahead, climbed to an impressive 134.5 points in June. This marks the highest reading in 2025 so far, and it suggests that many business leaders are beginning to see light at the end of the tunnel.

However, despite the upbeat outlook, Nigerian businesses are still facing several critical challenges. The most prominent issue remains limited access to finance, which has been a long-standing obstacle for many small and medium-sized enterprises. Other major concerns include unreliable power supply, fluctuating foreign exchange rates, inconsistent government policies, and the rising cost of commercial rent and property leases.

Among all sectors, manufacturing has clearly taken the lead in the current economic rebound. The sector’s performance index surged to 123.6 points in June, compared to 114.4 in the previous month. This improvement reflects strong growth across several important industries such as textiles, apparel, footwear, cement, plastics, rubber, wood, and paper products.

Firms in these manufacturing sub-sectors have reported increases in production output and better performance across their supply chains. This resurgence is an encouraging sign for an economy that has long been dependent on imports and crude oil revenues. Local production, if sustained, can help Nigeria achieve much-needed industrial diversification.

Despite the progress, manufacturers are still grappling with numerous structural problems. The BCM report points out that raw material shortages and unreliable electricity supply continue to disrupt production. In addition, import tariffs remain high, inflation continues to rise, and the cost of diesel has become a significant burden on operating expenses. The depreciation of the naira has further worsened input costs for many manufacturers who rely on imported goods or machinery.

Other serious concerns for manufacturers include the burden of multiple taxation, lack of access to affordable credit, persistent insecurity in certain regions, and uncertainty around government regulations.

In light of these issues, the Manufacturers Association of Nigeria (MAN) has urged the Central Bank of Nigeria (CBN) to reconsider its monetary policy stance. Specifically, the group is calling for a cut in the Monetary Policy Rate (MPR) to help lower inflation and support growth in the real sector. At its most recent meeting in July 2025, the CBN’s Monetary Policy Committee chose to maintain the MPR at 27.5 percent, a decision MAN believes is counterproductive to efforts aimed at improving industrial performance.

According to MAN, a rate cut would make it easier for businesses to obtain long-term loans and finance expansion. This, in turn, would enhance productivity and contribute to long-term economic development. The association emphasized the importance of aligning monetary policy with broader fiscal policies to stimulate meaningful growth.

While manufacturing is gaining momentum, the non-manufacturing sector is experiencing a more mixed picture. In June, this sector still posted a positive index of 120.7 points, which is encouraging. However, this marked the second consecutive monthly decline, down from 122.2 points in May and 123.6 points in April.

This gradual dip in confidence is mostly being driven by growing concerns within the services and trade industries. Many businesses in these areas are struggling with rising operating costs, largely due to high energy prices, poor infrastructure, and expensive transportation. These factors are eating into profit margins and affecting overall efficiency.

Access to finance also remains a key concern for non-manufacturing businesses. In addition, unpredictable foreign exchange rates are making it difficult for businesses to plan procurement and manage supply chains effectively.

While most sub-sectors in non-manufacturing still showed growth, some areas, like the motor vehicle and assembly sub-sector, experienced declines. Nevertheless, the overall picture remains positive, as the gains in stronger sub-sectors managed to outweigh the losses seen in weaker ones.

The BCM uses a standardized scale to assess business performance and expectations. Any index score below 100 is classified as a sign of contraction or pessimism, while scores above 100 indicate expansion and optimism. By using 100 as a neutral baseline, the report provides a clear snapshot of how Nigerian businesses are navigating the current economic landscape.

Overall, the BCM results suggest that Nigeria’s private sector is showing signs of resilience despite persistent headwinds. With manufacturing picking up pace and other sectors still holding on, there is cautious optimism that the economy might be on a path to recovery.

However, the challenges identified in the report cannot be overlooked. Structural issues such as power supply, financing, inflation, and policy uncertainty must be addressed if this momentum is to be sustained. As business confidence grows, so does the responsibility of policymakers to create an environment that allows Nigerian businesses to thrive and compete on a global scale.