In January 2026, the cost of doing business in Nigeria surged sharply, posing new challenges for firms struggling to navigate a volatile economic environment. According to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG), the overall cost-of-doing-business index jumped to 90.5 points in January from just 54.7 in December 2025 a dramatic rise that signals mounting pressure on companies across sectors.
This spike in business costs, NESG says, stems from an interplay of newly introduced tax reforms, adjustments in fuel prices, and enduring inflationary pressures that continue to squeeze firms’ operating environments. The combination of these forces has created what the report describes as a “perfect storm” of cost pressures, one that is now visibly restraining economic activity at the beginning of the year.
The BCM, a widely watched survey of business leaders and senior managers across Nigeria’s key industries, also showed that input prices surged to 96.9 points in January from 68.9 in December. This reflects not just higher energy and transport costs but also the increasing price of raw materials and intermediate goods that companies rely on to produce and sell their products.
As a result of these cost pressures, overall business performance softened. The BCM’s general performance index fell to 105.8 points in January from 112.0 in December its weakest reading in six months. NESG’s analysts noted that this decline highlights a broad weakening in business conditions across much of the economy.
The agriculture and trade sectors were among the hardest hit. Agriculture’s index fell below the critical 100-point threshold to 99.5 points in January, down from 112.9 in December, while trade plunged further into contraction territory at 92.7 points, significantly lower than its December reading of 123.8. These contractions helped offset modest continued growth in manufacturing and services, both of which remained above the expansion threshold but at significantly softer levels than in the previous month.
Manufacturing eased to 115.8 points from 117.9, while services softened to 102.1 from 104.3, showing that even once-resilient sectors are experiencing a slowdown. Only non-manufacturing activities sustained modest expansion during the month, underscoring the uneven nature of the recovery and rising costs.
The report also highlighted several structural headwinds facing Nigerian businesses. Limited access to affordable finance continues to constrain investment, while irregular power supply and rising commercial property costs are further dampening growth prospects. Weak consumer demand following the post-holiday period added to the downturn, reducing production orders and eroding companies’ cash flows.
Despite the downturn, there remains a degree of cautious optimism among business leaders about the near future. While the Future Business Expectation Index which measures confidence for the next one to three months declined to 124.7 points in January from 132.6 in December, it still indicates that many firms expect conditions to improve, provided supportive policies, currency stability, and stronger export demand take hold. However, uncertainties particularly those tied to election-related dynamics could dampen new investment and slow recovery momentum.
Looking ahead, manufacturing emerged as the sector with the strongest expectations for future growth, even as agriculture recorded the weakest near-term confidence levels. These divergent trends reflect deep structural differences across Nigeria’s economy, as well as varying capacities among sectors to weather cost pressures and tap into growth opportunities.
In sum, the start of 2026 brought renewed caution for Nigeria’s private sector. Sharp increases in the cost of doing business triggered by tax reforms, elevated fuel prices, and sustained inflation have moderated business activity and underscored the difficult balance policymakers face in pursuing reforms while maintaining a conducive environment for growth.
