Financing Overtakes Power as Nigerian Traders’ Number-One Constraint, NESG Finds

Limited access to financing has overtaken every other constraint facing Nigerian traders, ranking first in the Nigerian Economic Summit Group's first-half 2026 survey of the trade sector with a score of 12 — ahead of inadequate power supply, unclear economic policies and commercial rent costs, which each scored 10, in the group's report "Trade Sector Report: From High Volume Commerce to Productive Distribution".

The finding is more troubling than it sounds, because it comes from a sector that is nominally getting credit. The NESG's Access to Credit Index stood at 112.0 in expansionary territory, yet businesses told the survey that the money available is too expensive, too small or too short-term to fund expansion. Access, in other words, is not the same as finance.

Profitability is quietly eroding

The report's sharpest signal sits in its operating indicators. The sector's Cash Flow Index of 121.9 shows traders remain liquid — goods move, invoices settle. But the Operating Profit Index declined to 98.1 from 102.9 in the first half of 2025, moving into contraction. Nigerian commerce is turning over more cash and keeping less of it, a combination the NESG attributes to financing costs eating margins faster than traders can reprice.

The gap between present condition and future expectation is equally wide. The Future Business Expectations Index reached 156.1, against a current Overall Index of 102.6 — traders are optimistic about turnover and operating conditions ahead — yet the Future Investment Index sat exactly neutral at 100. Confidence is not converting into expansion plans, which is what happens when businesses can price the demand but cannot price the capital.

A big sector with a thin foundation

The stakes are structural. Trade contributed 17.89 per cent of Nigeria's GDP in the first quarter of 2026, and total merchandise trade rose to N41.44 trillion in the second quarter, up 5.61 per cent from N39.24 trillion a year earlier. A sector this large cannot be squeezed on financing without transmitting the squeeze to prices, employment and the distribution chains that feed every state in the federation.

The constraint rankings also tell a policy story. Foreign exchange availability, which topped the list a year ago, has fallen to fifth place with a score of 8 — the NESG calls its declining prominence an encouraging development, and it is one of the reform period's clearest wins. What replaced it at the top is harder for the central bank to fix: the problem is now the price and tenor of naira credit in a 23 per cent policy-rate environment, not the availability of dollars.

Why traders cannot borrow their way out

Trade is the economy's most working-capital-hungry business: goods are bought at today's prices and sold weeks later, against seasonal demand cycles that December exemplifies. When policy rates hold at 23 per cent and government securities offer 15.8 per cent on a one-year bill, banks can earn risk-free returns without touching a single trader — the structural crowding-out documented in the same week's Treasury bill auction, where investors bid N2.05 trillion for N800 billion of paper.

The NESG's data suggest the result is a two-tier trade economy. Well-capitalised wholesalers with internal funding keep expanding margins of scale, while the long tail of retailers and distributors — the businesses that actually move goods to consumers — fund inventory from cash flow and cap growth accordingly.

What would move the needle

There is a template inside the report itself. The Foreign Exchange Availability constraint's fall from first place to fifth followed deliberate, coordinated intervention; the NESG explicitly calls the decline encouraging. Financing constraints respond to the same treatment — targeted instruments for distribution credit, guarantee schemes that stretch tenors, and a rates environment that narrows the gap between treasury yields and trade lending. The survey's next reading will show whether the same attention gets the same result.

The report's implicit agenda is threefold: cheaper and longer-tenored credit instruments for distribution businesses, reliable power to cut the operating costs that scored second, and policy consistency on the issues that scored third. None is quick. But the neutral investment index is the number policymakers should watch — when a sector generating a fifth of GDP stops planning to expand, the costs arrive later as slower growth, higher prices and lost jobs rather than as a headline.