Tinubu's Revised Taxes, Rising Fuel Prices Slowed Business Growth in Nigeria in January 2026
- Business confidence in Nigeria fell to a six-month low in January 2026, according to the NESG Business Confidence Monitor
- Most sectors recorded weaker performance, while rising operating and input costs significantly squeezed margins and constrained investment
- Firms remained broadly optimistic that sustained policy reforms could support improved growth and stability ahead
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Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
Rising taxes and recent fuel price changes dampened business momentum in Nigeria in January 2026, dragging business confidence to its lowest level in six months, according to the latest Business Confidence Monitor (BCM) released by the Nigerian Economic Summit Group (NESG).
The NESG defined business confidence as a pool of economic indicators that measure the current business condition and the extent of optimism or pessimism that business managers feel about the general state of the Nigerian economy, as it affects key business decisions within three months.
Source: UGC
The report revealed that the Current Business Performance Index fell to 105.8 points in January, down from 112.0 points recorded in December 2025.
Although the index remained above the 100-point benchmark that signals expansion, the decline marked the weakest performance since mid-2025.
NESG linked the slowdown to escalating operating costs, subdued consumer demand following the festive period, and the combined effects of the and higher energy prices on business operations.
Sectoral Performance Shows Broad Weakness
A breakdown of sectoral performance showed that economic activity softened across most areas. Agriculture and Trade slipped into contraction, posting indices of 99.5 points and 92.7 points respectively, compared with 112.9 points and 123.8 points in December.
Manufacturing and Services continued to expand, recording 115.8 points and 102.1 points, but both sectors experienced slower growth than in the previous month. The Non-manufacturing sector stood out as the only segment that maintained relatively stronger expansionary momentum.
NESG also reported declines across all major BCM sub-indices, including general business conditions, production levels, demand, investment, financial health, supply orders, trade stockpiling, access to credit and cash flow.
According to the group, this widespread moderation reflected the usual post-holiday slowdown, further intensified by longstanding structural constraints facing businesses.
Rising Costs and Cautious Outlook Ahead
Cost pressures rose sharply during the review period. The cost of doing business index surged to 90.5 points in January from 54.7 points in December 2025, while the input prices index climbed to 96.9 points from 68.9 points.
NESG described the environment as a “perfect storm” triggered by tax reforms, fuel price adjustments and lingering inflationary effects, all of which squeezed profit margins and limited business activity.
The report also highlighted the key challenges faced by businesses to include limited access to finance, irregular power supply, and rising commercial property costs, which dampened investment and deteriorated business performance across sectors.
These issues, NESG noted, have continued to undermine investment decisions, elevate operational risks and constrain firms’ ability to expand production and employment.
Looking ahead, the Future Business Expectation Index, which tracks business sentiment over the next one to three months, declined for the second straight month, easing to 124.7 points in January from 132.6 points in December 2025. Despite the moderation, optimism remained across all sectors, though at varying levels.
NESG concluded that sustained implementation of reforms without policy reversals would create a more stable environment, enabling Nigerian businesses to strengthen resilience, unlock growth opportunities and improve overall performance in the coming months.
Source: Getty Images
Data source
The data set for constructing NESG BCM indices is generated from various qualitative responses reported in the BCS.
The BCS, a monthly survey conducted by NESG, gathers information on various variables across different economic activities from the owners and managers of businesses operating in Nigeria.
The survey was conducted in Lagos, Kano, and Abuja to provide the key information that turns the NESG’s BCM into a representative monthly measure of managers' confidence in the Nigerian business environment.
Nigeria's economy sustained by resilience, expert says
Speaking on the data, Ifeanyi Ubah, a financial analyst, told Legit.ng that the BCM paints a picture of an economy under mounting pressure, where expansion is being sustained more by resilience than by strength.
He said:
"Although overall business activity remains above the contraction threshold, the sharp decline in confidence, broad-based weakening across sectors and rising cost indices suggest that growth momentum is fragile.
"For economic performance to strengthen sustainably, policy consistency will be critical, alongside targeted interventions to ease cost pressures and improve infrastructure."
He added that without these supports, the economy risks prolonged low-growth expansion driven by survival strategies rather than robust investment-led growth.
Source: Legit.ng
