By Taibat Ummi Yakubu
The United States Department of State has identified insecurity, corruption, port congestion and unpredictable regulations as major barriers to investment in Nigeria, warning that the challenges continue to undermine investor confidence despite signs of improvement in the country’s economic indicators.
In its 2026 Investment Climate Statements on Nigeria, the department said the investment environment had been shaped by the economic reforms introduced by President Bola Tinubu’s administration, including the removal of fuel subsidies and the liberalisation of the foreign exchange market. Although the reforms initially triggered significant economic volatility, the report noted that some indicators suggested a degree of stabilisation in early 2026.
However, it warned that persistent security threats, bureaucratic obstacles and the social consequences of the reforms remained significant concerns for foreign businesses considering investment in Africa’s largest economy.
“The security environment is a primary variable which gives pause to potential investors,” the report stated, pointing to continuing threats across different parts of the country. It noted that although attacks on oil infrastructure in the Niger Delta had declined, oil theft and illegal bunkering remained unresolved. In northern Nigeria, the expansion of terrorist and bandit groups continued to threaten agribusiness and mining activities, making investment in some areas increasingly challenging.
The report also raised concerns about the handling of regulatory disputes involving foreign executives, citing the nearly eight-month detention in 2024 of Tigran Gambaryan, a US citizen and Binance executive. According to the department, cases involving detentions and restrictions on individuals leaving the country could discourage foreign business leaders who fear that commercial disagreements might escalate into prolonged legal or regulatory confrontations.
Nigeria’s port operations were another major concern highlighted in the report, with inefficiencies described as a hidden cost that increases the financial burden on businesses involved in international trade. Although Lekki Deep Seaport handled $9.6 billion in trade in 2025 while operating at about 50 per cent capacity, older facilities at Apapa and Tin Can Island continued to experience cargo delays, with dwell times reportedly exceeding 20 days because of manual examinations.
To address the problem, the Nigerian government launched the first phase of the National Single Window platform on March 27, 2026. The initiative is designed to bring agencies such as the Nigeria Customs Service, the National Agency for Food and Drug Administration and Control, and the Standards Organisation of Nigeria into a unified digital system for processing trade-related transactions. The programme targets a reduction in cargo dwell time to fewer than seven days and an 80 per cent cut in manual paperwork by the end of 2026.
Despite these challenges, the US report acknowledged a substantial increase in capital entering Nigeria but cautioned that the figures did not necessarily translate into long-term investment in factories, infrastructure and other productive assets. Nigeria’s capital importation reportedly reached $21 billion in October 2025, although 92 per cent consisted of foreign portfolio investments attracted by high interest rates rather than direct investment in physical infrastructure.
The department noted that Nigeria generally permits full foreign ownership in most sectors, subject to restrictions in certain industries and applicable licensing requirements. It also highlighted the Nigerian Investment Promotion Commission’s One-Stop Investment Centre, which coordinates 27 government agencies to help investors navigate administrative procedures. US foreign direct investment in Nigeria reached $7.9 billion by the end of 2024, representing a 25 per cent increase from the previous year, while bilateral trade between both countries stood at $14.8 billion in 2025.
On the broader economy, the report acknowledged that the Tinubu administration’s reforms had improved some macroeconomic indicators but imposed substantial costs on households. It said the removal of fuel subsidies had caused petrol prices to quintuple from their 2023 levels, contributing to the pressure on living costs and an estimated national poverty rate of 63 per cent in 2025, citing an April 2026 World Bank report.
Nigeria’s gross domestic product growth increased from 3.3 per cent in 2023 to 4.1 per cent in 2024 before moderating to four per cent in 2025. The report also cited foreign exchange reserves of $50.45 billion in February 2026, which it described as the highest level in 13 years. Meanwhile, headline inflation, which reached 34.8 per cent in late 2024, fell to 15.15 per cent by December 2025 following the rebasing of the Consumer Price Index and subsequent methodological changes. Food inflation stood at 10.84 per cent under the rebased index during the same month.
Corruption was identified as another persistent obstacle, particularly in port operations, where the report said customs delays and other administrative problems continued to hamper trade. It also characterised Nigeria’s trade regime as somewhat protectionist, citing high tariffs and import restrictions intended to protect local industries. Some businesses, it added, are required to invest in domestic production to qualify for permits or import quotas covering the same products.
The report further observed that Nigeria’s regulatory environment was undergoing a structural reset intended to improve predictability, although implementation remained uneven. It highlighted the transition from the Pioneer Status Incentive scheme to the Economic Development Tax Incentive, which took effect in January 2026, as an adjustment requiring attention from foreign businesses navigating the country’s tax and investment framework.
Overall, the US assessment presents a mixed picture of Nigeria’s investment climate: improving economic indicators and rising capital inflows on one hand, but persistent insecurity, corruption, infrastructure bottlenecks and regulatory uncertainty on the other. The report suggests that sustaining investor confidence will depend not only on macroeconomic reforms but also on addressing the practical risks and costs businesses face when operating in the country.
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