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. (The Cable)
