Nigerian businesses continued to face high operating costs in October 2026 as unreliable electricity, limited access to credit, insecurity and inadequate infrastructure constrained their performance, according to the Nigerian Economic Summit Group (NESG).
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The group's October 2026 Business Confidence Monitor (BCM) showed that the Cost of Doing Business Index stood at 45.2 points, while the Producer Prices Index recorded 65.5 points. Although both indicators improved from their September readings, they remained below the 100-point benchmark, indicating that a majority of surveyed businesses continued to experience cost and pricing pressures.
The report also identified high rental costs as one of the challenges confronting businesses, placing commercial property expenses alongside electricity, financing and infrastructure constraints.
Business Activity Slows Despite Continued Expansion
Nigeria's Current Business Performance Index declined to 115.4 points in October from 117.8 points in September, indicating that private-sector activity expanded at a slower pace.
The October reading remained above the 100-point threshold that separates expansion from contraction. It also exceeded the 111.3 points recorded in October 2025, suggesting that business performance remained stronger than a year earlier despite the monthly slowdown.
Most major indicators, including production, demand, investment, operating profit, supply orders, cash flow and employment, remained in expansion territory. However, their growth moderated compared with September.
The slowdown highlights the difficulty businesses face in sustaining growth when operating expenses remain elevated and access to essential infrastructure and financing remains constrained.
Electricity Supply and Financing Remain Major Constraints
The NESG identified irregular electricity supply and limited access to credit among the leading obstacles affecting businesses in October.
Unreliable power increases operating expenses as companies rely on generators, fuel and alternative energy systems to maintain production and deliver services. These additional costs can reduce operating margins and leave businesses with fewer resources for equipment, expansion and employment.
Limited access to credit creates another challenge. Businesses that cannot secure affordable financing may struggle to purchase raw materials, maintain inventories, upgrade equipment or fund expansion plans.
Insecurity and inadequate infrastructure also add to the cost of moving goods, managing operations and serving customers.
The combined effect of these constraints makes it harder for businesses to translate improving economic conditions into stronger production and investment.
High Rental Costs Add to Business Expenses
The report also identified high rental costs as a significant challenge, particularly for businesses operating in commercial spaces.
Rent forms part of the recurring expenses that businesses must manage alongside electricity, wages, transportation, inventory and other operating costs. For small and medium-sized enterprises, rising occupancy expenses can reduce the funds available for daily operations, business expansion and staff recruitment.
The pressure also has implications for commercial property markets. Businesses facing higher rents may reconsider their locations, reduce the space they occupy or pass some of the additional costs on to customers through higher prices.
For property owners and investors, the findings highlight the importance of balancing rental returns with the ability of businesses to sustain their occupancy costs. Persistent increases in commercial property expenses could affect tenant retention and demand for certain categories of business premises.
Trade and Services Record Stronger Performance
Performance varied across the sectors covered by the NESG survey.
Trade recorded the strongest improvement, with its Current Business Performance Index rising to 136.1 points in October from 128.5 points in September.
Services also improved, with its index increasing to 111.9 points from 107.7 points over the same period. These were the only two sectors to record stronger performance than in September.
Manufacturing remained in expansion territory, although its index declined to 107.3 points from 108.4 points. Operators continued to contend with power shortages, raw material constraints, high rental costs, limited credit and infrastructure deficiencies.
Agriculture also recorded slower growth, with its index falling to 113.8 points from 117.7 points. Non-Manufacturing declined to 107.7 points from 113.4 points.
The report further showed that Nigeria's export activity moved into contraction during October, adding to concerns about the competitiveness of domestic businesses.
Business Outlook Improves Despite Current Challenges
Despite the slowdown in current activity, business expectations for the coming months improved.
The NESG Future Business Expectation Index increased to 130.8 points in October from 128.9 points in September, indicating stronger optimism about business conditions over the next one to three months.
Trade recorded the strongest outlook, with an index of 194.0 points, followed by Manufacturing at 145.1 points and Non-Manufacturing at 135.0 points.
The NESG attributed the improved expectations partly to anticipated increases in consumer spending during the festive season and campaign-related expenditure ahead of the 2027 general elections.
The outlook suggests that businesses expect demand to improve, although persistent operating costs and infrastructure constraints could limit how much of that demand translates into stronger profitability and investment.
Implications for Nigeria's Business and Property Markets
The October findings highlight how infrastructure gaps, financing constraints and property expenses interact to influence business performance.
For commercial property investors, high rental costs present a potential challenge to occupancy and tenant affordability. Businesses must generate sufficient revenue to cover rent and other operating expenses, making the affordability of commercial premises an important factor in their location and expansion decisions.
The findings also underline the relationship between reliable electricity and property investment. Commercial and industrial locations with dependable power, accessible transport infrastructure and supporting services can offer businesses a more favourable operating environment.
However, improvements in the broader business climate will require more than stronger demand expectations. Reliable electricity, affordable credit, better infrastructure and sustainable commercial property costs remain essential to helping businesses maintain operations and expand.
The NESG's October monitor shows that Nigeria's private sector continued to grow, but persistent structural constraints slowed the pace of expansion. Whether the improved business outlook translates into stronger investment and employment will depend partly on how effectively these challenges are addressed.
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