Manufacturers lead Nigeria’s business recovery as agriculture contracts
Improved consumer spending boosted factory output and business confidence in May, while insecurity and financing challenges continued to weigh on farming activities.
Nigeria’s business environment showed signs of improvement in May 2026, with manufacturers recording their strongest performance in months as consumer spending picked up and confidence across key sectors improved.
However, the latest Business Confidence Monitor released by the Nigerian Economic Summit Group (NESG) revealed a sharply divided economy, with manufacturing rebounding strongly while agriculture, one of Nigeria’s largest employers, slipped back into contraction.
The report showed that the Current Business Performance Index rose to 104.6 points in May from 102.1 points in April, indicating continued expansion in business activity. Although firms reported stronger demand during the month, growth remained below the 109.8 points recorded in May 2025.
The strongest performance came from the manufacturing sector, whose index climbed to 114.1 points in May from 98.7 points in April, moving firmly back into expansion territory. The improvement was driven largely by stronger activity in Food, Beverage and Tobacco, Textile, Apparel and Footwear, and Basic Metals, Iron and Steel.
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Despite the rebound, manufacturers continued to contend with unreliable electricity supply, rising input costs, inadequate infrastructure and restricted access to credit.
While factories gained momentum, the agriculture sector moved in the opposite direction. Its index fell to 97.5 points from 103.2 points in April, pushing the sector into contraction. The NESG attributed the decline to insecurity, poor transport infrastructure, energy shortages and financing constraints affecting farming and agribusiness activities.
The Non-Manufacturing Industries sector also contracted, with its index declining to 99.4 points from 101.6 points in April. Weak performance in natural gas and oil and gas services offset gains recorded in construction and crude petroleum activities.
Elsewhere, the services sector maintained growth, with its index improving to 103.5 points from 101.5 points in April. Financial institutions, professional services and real estate firms recorded stronger activity, while telecommunications and broadcasting expanded at a slower pace.
Trade activity also strengthened, with the sector’s index rising to 105.5 points from 102.7 points, supported by increased wholesale and retail activity.
Despite persistent challenges across the economy, businesses remained optimistic about the months ahead. The Future Business Expectations Index stood at 127 points in May, slightly below the 128.6 points recorded in April.
Manufacturing recorded the highest confidence level among all sectors, followed by Trade, Agriculture and Non-Manufacturing Industries. According to the report, expectations of increased agricultural output during the harvest season and economic activities linked to the gradual build-up to election campaigns could support business performance in the coming months.
However, businesses continued to identify inadequate electricity supply, insecurity, limited access to finance, high rental costs and infrastructure deficits as major obstacles to stronger growth.
The latest figures suggest that while parts of Nigeria’s economy are regaining momentum, the recovery remains uneven, with manufacturing recovering faster than several other sectors.
