A report by the United States Department of State has identified insecurity, corruption, port inefficiencies and regulatory uncertainty as major obstacles to investment in Nigeria, warning that these challenges continue to weigh on the country’s business environment despite signs of macroeconomic stability.
In its ‘2026 Investment Climate Statements on Nigeria’, the
department said the country’s investment landscape has been shaped by the
outcomes of “painful but necessary” structural reforms introduced by the
President Bola Tinubu administration.
The report said the removal of fuel subsidies and
liberalisation of the foreign exchange market initially triggered significant
economic volatility, although indicators in early 2026 suggested some
stabilisation.
However, it warned that security concerns, administrative
bottlenecks and the social consequences of economic reforms remain significant
considerations for foreign investors.
“The security environment is a primary variable which gives
pause to potential investors,” the report said.
It noted that although attacks on oil infrastructure in the
Niger Delta have decreased, oil theft and illegal bunkering persist.
“In the North, the expansion of terrorist and ‘bandit’
groups continues to degrade the climate for agribusiness and mining,” the
document added.
The report also raised concerns about the treatment of
foreign business executives in regulatory disputes, citing the detention of
Tigran Gambaryan, a US citizen and Binance executive, for nearly eight months
in 2024.
“Furthermore, the use of coercive exit bans and detentions —
highlighted by the high-profile nearly eight-month detention in 2024 of U.S.
citizen Binance employee Tigran Gambaryan — serves as a cautionary note for
foreign executives regarding the risks of aggressive regulatory friction,” it
said.
The report said such cases could influence the perception of
Nigeria as a destination for foreign investment.
PORT DELAYS DESCRIBED AS ‘HIDDEN TAX’ ON INVESTMENT
The department identified inefficiencies at Nigerian
seaports as another major challenge for businesses, particularly those
dependent on imports and exports.
“Port inefficiency remains a significant ‘hidden tax’ on
investment,” the report said.
It noted that the Lekki Deep Seaport handled $9.6 billion in
trade in 2025 and operated at 50 percent capacity, helping to ease pressure on
older facilities.
However, it said traditional ports in Apapa and Tin Can
Island continue to experience cargo dwell times exceeding 20 days because of
manual examinations.
“To address this, the government launched phase one of the
National Single Window (NSW) on March 27, 2026,” the report said.
The platform is designed to integrate trade agencies,
including the Nigeria Customs Service, the National Agency for Food and Drug
Administration and Control and the Standards Organisation of Nigeria, into a
single digital workflow.
According to the report, the initiative targets a reduction
in cargo dwell time to fewer than seven days and the elimination of 80 percent
of manual paperwork by the end of 2026.
92% OF CAPITAL INFLOWS WAS PORTFOLIO INVESTMENT
The report acknowledged an increase in capital inflows but
said the figures did not necessarily reflect a corresponding surge in long-term
investment in physical infrastructure.
“Nigeria’s capital importation reached $21 billion in
October 2025, a large increase from 2024,” it said.
“However, 92 percent was made up of foreign portfolio
investment (‘hot money’) seeking high interest rates, while actual foreign
direct investment (FDI) in physical infrastructure remained modest.”
The report said Nigeria continues to permit full foreign
ownership in most sectors, subject to restrictions in certain industries and
licensing requirements.
It also noted that the Nigerian Investment Promotion
Commission’s One-Stop Investment Centre coordinates 27 government agencies to
help investors navigate administrative processes.
The report said US foreign direct investment in Nigeria
reached $7.9 billion by the end of 2024, representing a 25 percent increase
from the previous year.
It added that bilateral trade between Nigeria and the United
States reached $14.8 billion in 2025.
The department said Nigeria’s economic reforms had improved
some macroeconomic indicators but imposed high costs on households.
“The fiscal correction came at a high social cost,” the
report said.
It added that the removal of fuel subsidies had caused
petrol prices to “quintuple from 2023 levels”, contributing to an estimated
national poverty rate of 63 percent in 2025, citing an April 2026 World Bank
report.
The report said Nigeria’s gross domestic product growth rose
from 3.3 percent in 2023 to 4.1 percent in 2024 before easing slightly to four
percent in 2025.
It also noted that the Central Bank of Nigeria reported
foreign exchange reserves of $50.45 billion in February 2026, which it
described as a 13-year peak.
On inflation, the report said headline inflation reached
34.8 percent in late 2024 before falling to 15.15 percent by December 2025
following the rebasing of the Consumer Price Index and subsequent
methodological changes.
Food inflation stood at 10.84 percent in December 2025 under
the rebased index, it added.
‘CORRUPTION REMAINS A SYSTEMIC BARRIER’
The report identified corruption as a persistent obstacle to
investment, including in port operations.
“Corruption remains a systemic barrier, including at
seaports where customs delays impede trade,” it said.
It also described Nigeria’s trade regime as “somewhat
protectionist”, pointing to high tariffs and import restrictions intended to
protect domestic industries.
According to the report, some companies are required to
invest in local production in exchange for permits and quotas to import the
same products.
It said the government had introduced reforms to improve the
regulatory environment, but implementation remains uneven.
“Nigeria’s regulatory environment has transitioned toward a
‘structural reset’ designed to improve predictability, though implementation
remains uneven,” the report said.
The department also highlighted the transition from the
Pioneer Status Incentive scheme to the Economic Development Tax Incentive,
which took effect in January 2026, as an area requiring administrative
adjustment for foreign businesses.
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