By SCM Times Staff
Nigeria’s private sector recovery showed signs of strain in March as a sharp spike in fuel prices and persistent power supply issues tempered the pace of expansion.
While underlying demand remained resilient, the latest Stanbic IBTC Bank Purchasing Managers’ Index (PMI) fell to 51.9 from 53.2 in February, signaling a marked cooling in business activity.
Although any reading above 50.0 indicates growth, the March data highlights a growing divergence between robust order books and the escalating costs of operation. While new orders rose sharply for the second consecutive month—driven by product launches and improved customer demand—actual output growth was described as “modest,” hampered by the soaring cost of energy and logistics.
The Inflationary Crunch
The most striking takeaway from the March report is the dramatic intensification of price pressures. Purchase costs rose at their fastest rate since January 2025, forcing businesses to hike selling prices at the steepest pace in over a year.
“While higher fuel costs and power supply issues contributed to a slowdown… underlying demand remains strong,” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank. However, he cautioned that the sectoral impact is uneven. While agriculture and retail sectors expanded, the manufacturing and services sectors—both sensitive to energy costs—saw activity contract.
Growth Outlook for 2026
Despite the immediate inflationary shocks, Stanbic IBTC has revised its 2026 GDP growth forecast upward to 4.22%, compared to 3.87% in 2025. This optimism is rooted in a projected 4.24% expansion in the non-oil sector, fueled by government infrastructure spending and a surge in “electioneering activity” expected to boost the media, logistics, and hospitality industries.
However, analysts warned that external shocks could derail this trajectory.
”The ongoing tensions in the Middle East pose a downside risk,” Oni noted. “Higher inflation emanating from sustained increase in fuel prices may lead to higher-for-longer interest rates, which may influence a slowdown in demand.”
Hiring and Inventories
The resilience of the private sector was evidenced by a tenth consecutive month of employment growth, though the pace of hiring slowed compared to February.
Businesses continued to accumulate inventories in anticipation of future demand, but business confidence slipped to a four-month low as the reality of a high-cost environment weighed on sentiment.
For now, Nigerian firms are walking a tightrope: balancing a healthy appetite from consumers against a cost-of-doing-business crisis that shows no signs of abating.
