Nigeria sustained expansion in business activity throughout 2025, signalling the potential for its strongest Gross Domestic Product growth since 2022, as easing inflation and reduced foreign exchange volatility helped stabilise operating conditions, a BusinessDay analysis of S&P Global’s Purchasing Managers’ Index (PMI) shows.
The headline PMI released by Stanbic IBTC Bank Nigeria remained above the 50-point threshold—indicating expansion—from January to December. On an annual average basis, Nigeria recorded a PMI of 53.3, up from 51.0 in 2024. This compares with average PMI readings of 50.3 in 2023 and 58.4 in 2022.
By contrast, Africa’s most populous nation experienced five months of contraction in 2024 and four in 2023, periods marked by surging inflation, FX instability, and cash shortages that disrupted private-sector activity.
Data from the National Bureau of Statistics show that Nigeria’s $252.2 billion economy grew by 3.98 percent in the third quarter of last year, moderating from 4.23 percent in the previous quarter but stronger than the 2.55 percent recorded in the same period of 2024.
The rebased full-year growth stood at 3.40 percent in 2024, the highest outturn in three years.
“We expect the Nigerian economy to grow by 3.8 percent in 2025 and 4.1 percent in 2026,” said Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank. “Manufacturing and services are likely to record stronger growth in 2025 compared with 2024, based on PMI trends.”
Oni added that government investment in infrastructure, livestock development, trade facilitation and oil and gas, alongside forward linkages from the Dangote refinery, should support broader growth. Lower interest rates, in line with easing inflation and exchange-rate stabilisation, are also expected to boost private consumption and business investment in 2026.
The PMI surveys track business conditions across roughly 400 private-sector firms by measuring new orders, output, employment, suppliers’ delivery times, and inventories. The index is widely regarded as a leading indicator of economic momentum.
Further analysis shows that Nigeria was the only major economy among eight African peers to record a full year of uninterrupted expansion last year.
“The Nigerian private sector remained in growth territory at the end of 2025 as improvements in customer demand fed through to higher new orders, output and purchasing activity,” S&P Global said in its December PMI report.
A similar trend was reflected in the Nigerian Economic Summit Group’s (NESG) Business Confidence Monitor, which showed that business conditions remained expansionary in December, extending the streak to twelve consecutive months.
“The NESG–Stanbic IBTC Business Confidence Index remained positive for most of the year, reflecting improved investor perception and a gradual recovery in corporate profitability,” said Muda Yusuf, founder and chief executive of the Centre for the Promotion of Private Enterprise. “Many firms that posted losses in 2024 returned to profit in 2025, underscoring recent stabilisation gains.”
Africa comparison
Among major African economies, Egypt recorded the highest number of contractions at eight months, followed by South Africa with six and Mozambique with five. Kenya experienced four months of contraction, while Ghana had two. Zambia and Uganda recorded the fewest contractions, at one month each.
On an annual average basis, Nigeria ranked second on the continent with a PMI of 53.3 last year. Uganda led with an average PMI of 53.7, while South Africa—Africa’s biggest economy—slipped into contraction at 49.3, down from an expansionary 50.0 a year earlier.
Egypt, despite recording the most contractions, improved marginally year on year to 49.6 from 48.7, but remained in contraction territory. Ghana, Africa’s best-performing currency market, edged up to 50.8 from 50.4.
The Central Bank of Nigeria’s December PMI showed a sharp improvement, with the composite index rising to 57.6 points—its strongest reading in about five years.
The CBN noted that stronger performance reflected a rebound in domestic demand and improving productive activity, particularly in non-oil sectors, as firms responded to better order inflows and easing operational constraints.
The apex bank attributed the improvement to a rebound in domestic demand and stronger activity in non-oil sectors as firms responded to higher order inflows and easing operational constraints. It said ongoing macroeconomic stabilisation measures have helped restore business confidence.
CBN data show the official exchange rate weakened sharply to N1,450/$ in 2024 from N645.10/$ in 2023. In the first eight months of 2025, the naira traded largely between N1,500 and N1,600 per dollar before strengthening to N1,480.30/$ on September 26, its firmest level in eight months. Since then, it has remained below N1,500/$.
The naira also closed 2025 outside Africa’s 10 worst-performing currencies, ending nearly two years on the list following sharp devaluations that fuelled volatility and FX shortages.
The improved currency stability coincided with a sharp deceleration in inflation. Headline inflation eased from 24.48 percent in January to 14.45 percent by November, according to the NBS.
Average inflation fell to 20.96 percent in 2025 from 33.2 percent in 2024 and 24.66 percent in 2023, reflecting moderating currency pressures, lower petrol costs, and more stable supply chains.
South Africa posts weakest business activity in Africa
South Africa recorded the weakest average business activity on the continent in 2025, with a PMI of 49.3, down from 50.0 in 2024. It also posted the second-highest number of contractions at six months.
The country closed the year with a December PMI of 47.7, down from 49.0 in November, signalling a sharper deterioration in operating conditions.
“Business activity decreased sharply in December, with the contraction widespread across sectors and the most pronounced since January,” S&P Global said, citing weak demand and difficult economic conditions.
New orders fell for the third consecutive month, with respondents pointing to weaker household spending, reduced business demand and softer export orders.