Nigeria’s $4bn FDI Rebound Still Insufficient, BACITI Says

Nigeria’s foreign direct investment (FDI) rebounded sharply to $4.005 billion in 2025, but the inflow remains insufficient to match the country’s economic size and development needs, the Bashir Adeniyi Centre for International Trade and Investment (BACITI) has said.

The figure represents a 148.2 per cent increase from the $1.614 billion recorded in 2024, making Nigeria one of Africa’s strongest positive performers in a year when total FDI into the continent fell by 26 per cent.

However, BACITI said the strong percentage increase should be viewed against Nigeria’s relatively low starting point, noting that the country accounted for only about 5.8 per cent of Africa’s FDI and approximately 0.25 per cent of global inflows in 2025.

The report, titled Global FDI Rebounds, But Africa Is Losing Share: Implications of the World Investment Report 2026 for Nigeria, was published in July 2026 following the release of the United Nations Trade and Development (UNCTAD) World Investment Report 2026.

Globally, FDI rose by 6 per cent from $1.532 trillion in 2024 to $1.624 trillion in 2025. But Africa moved in the opposite direction, with inflows falling from $94 billion to about $70 billion.

BACITI said Nigeria’s rebound was driven largely by transactions in oil, gas, refining, mining and related energy infrastructure, including the acquisition of Shell’s onshore business by Renaissance Africa Energy and Lafarge Africa by Huaxin Cement.

The concentration of the inflows, however, raises questions about the quality and wider economic impact of Nigeria’s FDI recovery.

BACITI distinguished between acquisitions, which transfer ownership of existing assets, and greenfield investments, which create new productive facilities and capacity. While both can contribute to economic activity, they do not necessarily produce the same level of new employment, supplier demand, exports or technology transfer.

The Centre therefore argued that Nigeria’s objective should go beyond attracting larger volumes of foreign capital to improving the composition and domestic impact of investment.

“Energy remains both Nigeria’s strongest advantage and its concentration risk,” BACITI said, noting that the continued dominance of hydrocarbons exposes the country to commodity cycles and energy-transition risks while potentially limiting employment multipliers.

It recommended using energy-sector FDI as an anchor for broader industrial development, particularly in gas-to-power, fertiliser, petrochemicals, plastics, industrial heat, marine services, engineering, fabrication and export manufacturing.

The report also warned that Nigeria faces growing competition from other African investment destinations.

Morocco recorded a 91 per cent increase in FDI in 2025, while Mozambique, Kenya and Côte d’Ivoire recorded increases of 60.2 per cent, 37.7 per cent and 37.2 per cent respectively.

Nigeria’s $4.005 billion inflow was higher than those of Ethiopia, Morocco, Kenya, Côte d’Ivoire and Ghana, but remained below Guinea, Mozambique and Egypt.

BACITI said Nigeria’s large market provides an important advantage, but market size alone may not compensate for unreliable electricity, logistics bottlenecks, regulatory uncertainty and insecurity.

It also highlighted the total cost of producing in Nigeria, including self-generated electricity, imported inputs, port delays, transport losses, financing costs, exchange-rate risks and regulatory compliance, as factors that influence investment decisions.

The Centre called for Nigeria to build an investment-ready pipeline of bankable projects, link energy investments with domestic industries, strengthen Nigerian suppliers and target strategic sectors including agro-processing, pharmaceuticals, petrochemicals, critical-mineral processing, renewable-energy components, digital infrastructure, logistics and export manufacturing.

It further recommended that the success of FDI should be measured not simply by the dollar value of inflows, but by the productive capacity, exports, employment, tax revenue, technology transfer and local procurement generated by the investments.

BACITI said Nigeria’s $4 billion rebound should therefore be treated as a springboard rather than a final victory, with the priority being to convert energy investments into wider domestic value chains and productive capacity.

The Centre’s central conclusion is that Nigeria needs to move from measuring FDI success predominantly by announced dollar inflows to measuring the economic capabilities those inflows create, including new productive capacity, non-oil exports, skilled employment, local supplier contracts, domestic processing and technology transfer.