Yemisi Izuora
Nigeria’s oil sector growth has been predicted to slow to 3.01 per cent in 2026 from 8.50 per cent in 2025, with crude oil production projected to average 1.70 million barrels per day.
According to Stanbic IBTC Bank and S&P Global, report higher fuel costs triggered by global tensions have pushed Nigerian firms to raise selling prices to a 16-month high, even as overall business activity continued to expand in April, according to the latest Purchasing Managers’ Index report.
According to the report, “The pass-through of increased input costs to customers resulted in a further sharp rise in output prices, with the rate of inflation quickening to the fastest since December 2024,” highlighting how elevated fuel costs directly fed into higher prices charged by businesses.
The PMI report, endorsed by the National Bureau of Statistics, showed that Nigeria’s private sector sustained growth momentum at the start of the second quarter, although inflationary pressures constrained the pace of expansion.
According to the report, the headline PMI rose to 52.4 in April from 51.9 in March, marking the third consecutive month above the 50.0 threshold that signals improvement in business conditions.
It noted that “the Nigerian private sector remained in growth territory… as customer numbers and market demand continued to strengthen,” but added that “the impacts of higher fuel costs as a result of the war in the Middle East were felt again, pushing up prices and reportedly limiting expansions in new orders and business activity.”
The report showed that new orders increased solidly in April, supported by stronger demand, although the growth rate softened due to rising inflation. Business activity also expanded at a slightly faster pace than in March, but firms said higher prices constrained output growth.
Sectoral performance was mixed, with activity rising in three of the four sectors monitored, while the services sector recorded a decline.
Cost pressures remained a major concern for businesses during the month. The report indicated that purchase prices increased rapidly, with the rate of inflation remaining close to March’s 15-month high.
It stated that “anecdotal evidence suggested that prices were often driven higher by increased fuel costs due to the war in the Middle East,” reinforcing the link between global energy shocks and domestic price dynamics.
In response to rising living costs, some firms increased staff wages to cushion the impact of higher transportation fares, leading to a modest rise in staff costs.
Despite these pressures, companies continued to expand their workforce, albeit marginally, as they responded to higher workloads. However, job creation slowed to its weakest level in three months.
Backlogs of work increased for the third consecutive month, driven by staff shortages, delayed customer payments, and challenges in sourcing raw materials.
Firms also intensified efforts to secure inputs, with purchasing activity rising for the seventeenth straight month. Inventories of raw materials increased at the fastest pace in five months, reflecting stronger demand and precautionary stock-building.
To ensure timely delivery of materials, companies prioritised prompt payments to suppliers, which contributed to a further shortening of supplier lead times, although the improvement was the weakest recorded so far this year.
Business confidence improved during the month, with about half of the surveyed firms expecting output to increase over the next 12 months. Companies cited plans to expand operations through new branches, stock accumulation, and entry into new markets.
Speaking on the report, Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said the sustained improvement in business conditions supported expectations of stronger economic growth in 2026.
According to him, “The health of Nigeria’s private sector improved in April… as new orders increased in line with higher customer numbers and rising demand even as price pressures remain prevalent.”
Oni added that companies raised selling prices in April “to the highest level since December 2024 in response to rising fuel and raw material costs,” while staff costs also edged higher as firms adjusted wages.
He projected that the Nigerian economy would grow by 4.22 per cent year-on-year in 2026, up from 3.87 per cent in 2025, driven largely by expansion in the non-oil sector.
According to him, the non-oil sector is expected to grow by 4.24 per cent, with services projected at 5.64 per cent, supported by increased investment across key sectors such as oil and gas, solid minerals, electricity, agriculture, and manufacturing.
The report is based on survey responses from about 400 private-sector companies collected between April 9 and April 28, covering sectors including agriculture, manufacturing, construction, wholesale, retail, and services.
It explained that the PMI is a diffusion index, where readings above 50 indicate an overall improvement in business conditions compared to the previous month, while readings below 50 signal deterioration.
The findings point to a fragile growth environment, where rising demand is supporting business activity, but persistent cost pressures, particularly from fuel prices, continue to weigh on expansion and pricing dynamics.