Nigeria is the third host economy for FDI in Africa, behind Egypt and Ethiopia. The country is among the most promising poles of growth in the continent and attracts numerous investors in the sector of hydrocarbon, energy, construction, etc. According to UNCTAD’s 2022 World Investment Report, FDI flows to Nigeria totalled USD 4.8 billion in 2021, more than doubling from the previous year (USD 2.3 billion in 2020) and well above the pre-pandemic level. In the same year, the total stock of FDI was estimated at USD 91.8 billion, around 20.8% of the country’s GDP. The main sectors attracting FDI inflows into Nigeria include oil and gas (by far the largest recipient), telecommunications, manufacturing, real estate, and agriculture. The UK has a long history of trade and investment with Nigeria and remains one of the largest investors in the country. China has become an increasingly important investor in Nigeria in recent years, particularly in infrastructure projects such as roads, railways, and power plants; while the U.S. is also a significant investor in Nigeria, particularly in the oil and gas sector. Data from the Bank of Nigeria show that in Q2/2022 the total value of capital importation into the country stood at USD 1.5 billion from USD 875.62 million in the corresponding quarter of 2021, showing an increase of 75.34%. The largest amount of capital importation was received through portfolio investment, which accounted for 49.33% (USD 757.32 million), followed by other investments with 41.09% (USD 630.87 million), while foreign direct investment accounted for 9.58% (USD 147.16 million) of total capital imported. The UK was the largest investor (50.8% of the total), ahead of Singapore (9%) and South Africa (8%).
Nigeria intends to diversify its economy away from oil by building a competitive manufacturing sector, which should facilitate integration into global value chains and boost productivity. The merging of trade, industry and investment under the ambit of the Federal Ministry of Industry, Trade and Investment reflects Nigeria's intention to effectively coordinate between these three key areas to improve its trading and investment environment. Some of the country's main advantages are a partially privatized economy, an advantageous taxation system, significant natural resources and a low cost of labour. On the other hand, widespread corruption, political instability, lack of transparency, security issues, import restrictions and poor quality of infrastructure are limiting the country's FDI potential. Intense bureaucracy also curbs foreign investment and the country’s underdeveloped power sector forces most businesses to generate a significant portion of their own electricity. Foreigners can have full ownership in most sectors, with the exclusion of certain sensitive sectors (such as arms and ammunition, narcotics, and military apparel). The Nigerian Investment Promotion Commission (NIPC) serves as a one-stop investment centre and is empowered to negotiate special incentives for substantial and/or strategic investments. Overall, Nigeria ranks 150th out of 180 economies on the 2022 Corruption Perception Index and 124th out of 176 on the 2023 Index of Economic Freedom.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||2,385||3,313||-187|
|FDI Stock (million USD)||87,013||87,525||88,202|
|Number of Greenfield Investments*||54||44||50|
|Value of Greenfield Investments (million USD)||6,143||1,636||2,027|
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
The Nigerian Government has introduced many programmes to boost FDI, notably in agriculture, exploitation and mining, oil and gas extraction, as well as in the export sectors. Tax incentives are granted to pioneering industries deemed beneficial for the economic development of the country and employment of its workforce (such as clothing); allowances facilitating capital investments and the deduction of interest on loans for gas companies are also planned. The list of inventives can be found here.
Industries considered crucial to national security, such as weapons, ammunition, military and paramilitary clothing, are not open to private investment.
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Latest Update: September 2023