BACITI Says Nigeria’s FDI Recovery Requires Better Investment Quality

By Olumide Johnson

The Bashir Adeniyi Centre for International Trade and Investment (BACITI), in its July 2026 report, Global FDI Rebounds, But Africa Is Losing Share: Implications of the World Investment Report 2026 for Nigeria, recently said that Nigeria’s Foreign Direct Investment (FDI) rose 148.2 percent to US$4.005 billion in 2025 from US$1.614 billion in 2024. Drawing on the United Nations Trade and Development (UNCTAD) World Investment Report 2026, the centre noted that Nigeria emerged as one of Africa’s strongest performers despite the continent’s 26 percent decline in FDI. However, it argued that much of the inflow was concentrated in oil, gas, mining and corporate acquisitions, limiting its broader developmental impact. BACITI called for policies that prioritise productive investment, industrial linkages and domestic value creation over headline capital inflows.

DECISION HIGHLIGHT

The BACITI argues that Nigeria’s investment challenge has shifted from attracting foreign capital to converting it into productive capacity, technology transfer and industrial diversification.

DECISION MEMO

Nigeria’s sharp recovery in foreign direct investment represents a notable improvement in investor sentiment, but BACITI contends that the composition of capital inflows matters more than the headline figures.

The centre distinguishes between acquisition-led investment and greenfield projects that create new factories, infrastructure, jobs and export capacity. While acquisitions strengthen capital inflows and may improve corporate efficiency, they generate fewer economic spillovers than investments that expand productive assets.

The sectoral concentration of inflows further reinforces this concern. Energy continues to attract the largest share of foreign investment, reflecting Nigeria’s comparative advantage, but also increasing exposure to commodity cycles and the global energy transition. BACITI therefore advocates using energy investments as a platform for developing downstream industries including petrochemicals, fertiliser, engineering, fabrication and export manufacturing.

The report also places Nigeria’s performance within an increasingly competitive African investment landscape. Although Nigeria outperformed several regional peers in absolute inflows, structural constraints, including unreliable electricity, logistics inefficiencies, regulatory uncertainty, financing costs and insecurity, continue to weaken its attractiveness for long-term productive investment.

As BACITI observed, “Energy remains both Nigeria’s strongest advantage and its concentration risk.” The Centre concludes that investment success should be measured by productive capacity, exports, employment, technology transfer and local supplier development, rather than by capital inflows alone.

DATA BOX

• Nigeria’s FDI (2025): US$4.005 billion
• Nigeria’s FDI (2024): US$1.614 billion
• Year-on-year growth: 148.2 percent
• Africa’s FDI change: Down 26 percent
• Global FDI (2025): US$1.624 trillion
• Global FDI growth: 6 percent
• Nigeria’s share of Africa’s FDI: Approximately 5.8 percent
• Nigeria’s share of global FDI: Approximately 0.25 percent

Major investment drivers

• Oil and gas
• Refining
• Mining
• Energy infrastructure
• Corporate acquisitions

Priority sectors identified

• Gas-to-power
• Petrochemicals
• Fertiliser
• Agro-processing
• Pharmaceuticals
• Critical minerals processing
• Renewable energy components
• Digital infrastructure
• Logistics
• Export manufacturing

WHO WINS / WHO LOSES

Wins

• Energy and extractive industries attracting foreign capital
• Large corporates involved in strategic acquisitions
• Downstream industries if stronger industrial linkages emerge
• Domestic suppliers integrated into global value chains

Loses

• Manufacturing sectors lacking greenfield investment
• Labour-intensive industries requiring fresh productive capacity
• Regions constrained by infrastructure and logistics deficiencies
• Smaller domestic firms excluded from foreign investment supply chains

POLICY SIGNALS

• Investment policy is shifting from quantity to quality.
• Industrial policy should prioritise domestic value addition and supplier development.
• Energy investment should serve as a catalyst for wider industrialisation.
• Structural reforms remain central to improving Nigeria’s competitiveness within Africa.

INVESTOR SIGNAL

The rebound confirms renewed investor confidence in Nigeria’s strategic sectors, particularly energy. However, long-term investment opportunities are likely to be strongest where policy encourages value-chain integration, export-oriented manufacturing and technology-intensive production. Investors should increasingly assess the quality and multiplier effects of investment opportunities rather than headline FDI volumes alone.

RISK RADAR

• Continued dependence on energy-sector FDI
• Limited greenfield investment
• Infrastructure and electricity constraints
• Regulatory uncertainty
• Logistics inefficiencies
• Exchange rate and financing risks
• Rising competition from other African investment destinations
• Weak domestic value-chain integration limiting economic spillovers