Stanbic IBTC Bank
Abayomi Susan
Nigeria’s private sector remained in expansion territory at the beginning of the second quarter of the year, supported by rising customer numbers and sustained market demand. However, elevated fuel costs—linked to ongoing geopolitical tensions in the Middle East—continued to exert pressure on businesses, driving up prices and constraining growth in new orders and overall activity.
The Stanbic IBTC Purchasing Managers’ Index (PMI®), which measures private sector performance, stood at 52.4 in April, up from 51.9 in March. Readings above 50.0 indicate expansion, meaning the sector has now recorded three consecutive months of improvement, with growth slightly stronger than in the previous period.
According to Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, the improvement reflects stronger demand conditions despite persistent inflationary pressures. He noted that new orders rose alongside customer growth, but rising costs—particularly fuel and raw materials—limited the pace of expansion. Selling prices climbed to their highest level since December 2024, while some firms also adjusted wages to help employees cope with higher transport expenses.
Oni further stated that improved business conditions support a positive outlook for Nigeria’s economy, with growth projections of 3.87% in 2025 and 4.22% in 2026. He added that the non-oil sector is expected to remain the main growth driver, particularly services, while oil sector growth may moderate due to production adjustments.
Despite stronger demand, inflationary pressures continued to weigh on performance. New orders and business activity increased, though at a slower pace, with firms reporting that higher prices limited expansion. Output rose across most monitored sectors except services, while increased fuel costs were repeatedly cited as a key driver of higher input prices.
Employment rose marginally in April as firms responded to rising workloads, though job creation slowed compared to previous months. Some companies reported staff shortages, payment delays, and raw material supply challenges, which contributed to a third consecutive monthly rise in backlogs.
Purchasing activity continued to increase for the seventeenth straight month, supported by stronger demand. Stocks of inputs rose at the fastest pace in five months, while supplier delivery times improved slightly, though at a slower rate.
Business confidence also improved in April, with about half of surveyed firms expecting higher output over the next 12 months, driven by plans for expansion, new branch openings, and market diversification.
