From Our Business Desk
Africa’s private sector entered the second half of 2026 on firmer ground, with business activity rising to its highest level in seven months during July – a recovery driven largely by Nigeria and five other African economies.
An analysis of Purchasing Managers’ Index (PMI) data from S&P Global across eight African economies shows that the average PMI rose to 51.0 in July, its highest level since January, up from 50.5 in June.
A reading above 50 signals expansion in business activity from the previous month, while a reading below 50 indicates contraction.
Nigeria, Africa’s largest economy, sustained its growth momentum for the sixth consecutive month, recording a PMI of 52.5 in July. Although this was a moderation from June’s 53.4, it remained firmly in expansion territory.
“Businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand,” said Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank.
The Nigerian private sector’s performance was supported by strong growth in new orders, output and employment. Encouragingly, input costs rose at their slowest pace in five months, while annual inflation remained relatively stable at 15.91 percent in June, helped by relative naira stability.
The Central Bank of Nigeria kept its benchmark rate at 26.5 percent in July after raising it by 50 basis points in February.
Alongside Nigeria, five other African economies recorded private-sector expansions in July – the highest number since March. Uganda, Kenya, Zambia, Mozambique and South Africa all posted readings above the 50-point threshold.
Uganda retained its position as the strongest-performing economy for the 18th consecutive month, with a PMI of 55.5. Although this eased from June’s 56.5, it marked sustained growth supported by robust output and new orders.
Mozambique recorded one of the most notable improvements, with its PMI rising to 51.4 from 50.0 in June – marking the strongest improvement in business conditions in three years.
New business grew at its fastest pace in eight months, while output expanded at the joint-fastest rate in three years.
Kenya returned to expansion after several months of stagnation or decline, with its PMI rising from 50.0 in June to 51.3 in July, driven by the strongest increase in new orders since January. Employment expanded at its fastest pace of the year, while business optimism reached its highest level since February 2023.
Zambia also returned to growth, ending three consecutive months of contraction. Its PMI rose to 50.7 from 49.9, supported by a recovery in output and new orders, stronger employment growth and improved supplier performance. Business confidence reached its highest level in eight-and-a-half years.
South Africa barely remained in expansion territory, with a PMI of 50.3, down slightly from 50.5 in June, highlighting the uneven nature of the regional recovery.
Two Economies Remain in Contraction
However, the recovery was not uniform across the continent. Ghana and Egypt remained below the 50-point threshold.
Ghana’s PMI increased to 49.2 from 47.7 in June, remaining in contraction for a second consecutive month. New orders declined again as customers struggled to secure funds to pay for purchases, but employment continued to rise and business confidence improved.
Egypt remained the weakest performer at 46.8, marking a seventh consecutive month of contraction in the non-oil private sector. However, business confidence among Egyptian firms rose to a three-year high in July, offering a glimmer of hope for a future recovery.
The Middle East Factor
But the stronger July performance comes with an important caveat: much of the improvement was recorded before renewed tensions in the Middle East began to intensify towards the end of the month.
“July’s data were collected over a period during which a tailwind from lower oil prices and improved prospects for the situation in the Middle East, including increased shipping flows through the Strait of Hormuz, supported businesses,” said Chris Williamson, business economist and executive director at S&P Global Market Intelligence.
“But that tailwind went into reverse toward the end of the month, with oil prices rising sharply again amid renewed hostilities and escalating disruptions to shipping.”
Brent crude has retreated from wartime highs above $120 a barrel to close to $90, but markets remain sensitive to developments around the Strait of Hormuz, through which roughly a fifth of global oil and liquefied natural gas supplies normally pass.
Oil futures had risen by more than $3 a barrel after Iran reviewed legislation that would ban US and Israeli vessels from the Strait of Hormuz, underscoring the sensitivity of energy markets to developments in the region.
For African businesses, the immediate concern is not simply whether activity remains above the 50-point PMI threshold, but whether stronger demand can translate into sustained output and investment without renewed energy, shipping and inflation pressures undermining the recovery.
What This Means for Nigeria
For Nigeria, the stakes are particularly high. As Africa’s largest oil producer, higher crude prices could boost government revenues in the short term. However, the country remains heavily dependent on imported refined petroleum products, meaning higher global oil prices quickly translate into higher fuel costs, transportation expenses and ultimately, higher inflation.
The relative stability of the naira in recent months has been a key factor in moderating inflation. Any renewed pressure on the currency – driven by higher import costs or geopolitical uncertainty – could reverse those gains.
The Road Ahead
The July PMI data provide a cautiously positive picture of Africa’s private sector. Demand is recovering in several economies, businesses are becoming more optimistic and employment is strengthening in some markets.
But the recovery is far from secure. The biggest immediate risk is that renewed Middle East tensions could reverse some of the favourable conditions businesses enjoyed during the first half of July.
Higher oil prices would raise fuel and transportation costs across the continent. Disruptions to the Strait of Hormuz could increase shipping costs and delay imports, while renewed imported inflation could force central banks to keep interest rates higher for longer.
That would be particularly challenging for economies such as Kenya, Mozambique, Egypt and South Africa, where inflationary pressures are already constraining policy choices.
Last month’s numbers therefore represent an encouraging start to the second half of 2026, but they do not yet signal a decisive turning point.
The more important question for the months ahead is whether stronger demand can translate into sustained increases in output, investment and employment before higher energy costs and geopolitical uncertainty begin to erode the recovery.
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