Nigeria’s Private Sector Growth Slows As Rising Fuel Costs Drive Inflation – Stanbic IBTC PMI
By Rashidat Olushola Okunlade
Nigeria’s private sector growth moderated in March 2026 as escalating fuel costs intensified inflationary pressures, despite sustained expansion in new business orders, according to the latest Purchasing Managers’ Index (PMI) report by Stanbic IBTC Bank.
The report showed that the headline PMI declined to 51.9 in March from 53.2 in February, indicating a slower pace of expansion but still remaining above the 50.0 threshold that signals growth in business activity. This marks the 15th expansion in the past 16 months, underscoring continued resilience in the private sector.
Analysts attributed the softer growth primarily to rising fuel costs and persistent power supply challenges, which constrained output levels even as customer demand remained robust. The increase in demand, supported by new product launches, drove a further rise in new orders for the second consecutive month.
Commenting on the development, Head of Equity Research, West Africa at Stanbic IBTC Bank, Muyiwa Oni, noted that while economic headwinds weighed on overall activity, underlying demand conditions remained strong. He added that businesses are maintaining optimism, backed by plans to expand operations and intensify promotional activities.
Despite the positive demand outlook, inflationary pressures surged during the period. Input costs rose at the fastest pace since January 2025, largely driven by higher fuel prices. Consequently, firms passed on these costs to consumers, leading to the sharpest increase in selling prices since December 2024 across all major sectors—agriculture, manufacturing, wholesale and retail, and services.
Sectoral performance was mixed, with output expanding in agriculture and wholesale and retail, while manufacturing and services recorded declines. Employment levels, however, continued to rise for the tenth consecutive month, albeit at a slower pace, reflecting cautious business expansion amid rising costs.
Businesses also increased purchasing activity in response to higher new orders and anticipated workloads, though inventory accumulation remained modest. Supplier delivery times improved due to prompt payments, even as fuel-related logistics challenges persisted.
Looking ahead, Stanbic IBTC projects Nigeria’s economy to grow by 4.22 per cent year-on-year in 2026, up from 3.87 per cent in 2025. The non-oil sector is expected to drive this growth, with services projected to expand significantly. However, oil sector growth is forecast to slow.
The report highlighted that government investments across key sectors—including oil and gas, solid minerals, agriculture, and manufacturing—are expected to sustain production activity. Infrastructure development is also anticipated to boost construction and real estate sectors, while pre-election spending may stimulate growth in media, logistics, hospitality, and related industries.
Nonetheless, downside risks persist. Ongoing geopolitical tensions in the Middle East could sustain upward pressure on fuel prices, potentially leading to prolonged inflation and higher interest rates, which may dampen consumer demand if conditions worsen.
Overall, while Nigeria’s private sector continues to demonstrate resilience, rising operational costs remain a significant constraint on stronger economic expansion.
