The United States Department of State has identified insecurity, corruption, port inefficiencies and regulatory uncertainty as major barriers to investment in Nigeria, despite signs of improving macroeconomic stability.
In its 2026 Investment Climate Statements on Nigeria, the department said the country’s business environment continued to reflect the impact of what it described as “painful but necessary” structural reforms introduced by President Bola Tinubu’s administration.
According to the report, the removal of fuel subsidies and foreign exchange liberalisation initially triggered significant economic volatility. However, economic indicators in early 2026 suggested signs of stabilisation.
Despite these improvements, the report warned that security challenges, administrative bottlenecks and the social costs of the reforms remained major concerns for foreign investors.
“The security environment is a primary variable which gives pause to potential investors,” the department said.
The report noted that although attacks on oil infrastructure in the Niger Delta had declined, oil theft and illegal bunkering remained persistent challenges.
It also highlighted growing security threats in northern Nigeria, warning that the expansion of terrorist and bandit groups continued to undermine investment prospects in agriculture and mining.
“In the North, the expansion of terrorist and ‘bandit’ groups continues to degrade the climate for agribusiness and mining,” the report added.
The department also expressed concern over the treatment of foreign executives during regulatory disputes, citing the nearly eight-month detention of American Binance employee Tigran Gambaryan 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,” the report stated.
It warned that such incidents could undermine investor confidence and shape perceptions of Nigeria as a destination for foreign capital.
Seaport inefficiencies were also identified as a major obstacle to investment, particularly for businesses that depend heavily on imports and exports.
“Port inefficiency remains a significant ‘hidden tax’ on investment,” the department said.
The report noted that Lekki Deep Seaport handled $9.6 billion worth of trade in 2025 while operating at 50 per cent of its capacity, helping to ease pressure on older port facilities.
However, cargo dwell times at the Apapa and Tin Can Island ports continued to exceed 20 days, partly because of manual inspection procedures.
To address these challenges, the Nigerian government launched the first phase of the National Single Window (NSW) initiative on March 27, 2026, according to the report.
The platform is designed to integrate government agencies, including 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 trade documentation and clearance.
The initiative aims to reduce cargo dwell times to fewer than seven days and eliminate 80 per cent of manual paperwork by the end of 2026.
Despite growing capital inflows, the department cautioned that Nigeria had yet to achieve a corresponding increase in long-term investment in physical infrastructure.
“Nigeria’s capital importation reached $21 billion in October 2025, a large increase from 2024,” the report 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 figures suggest that much of the capital entering Nigeria was directed towards financial assets rather than long-term investments in productive sectors and infrastructure.
This distinction remains important because portfolio investments can be more sensitive to changes in interest rates and market conditions, while direct investment in physical assets can support longer-term economic activity.
The report noted that Nigeria allows full foreign ownership in most sectors of its economy, although certain industries remain subject to restrictions and licensing requirements.
It also highlighted the role of the Nigerian Investment Promotion Commission’s One-Stop Investment Centre, which coordinates 27 government agencies to help investors navigate administrative procedures.
According to the department, 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.
Bilateral trade between the two countries also reached $14.8 billion in 2025.
While these figures point to continued economic engagement between Nigeria and the United States, the report’s findings suggest that addressing insecurity, improving port efficiency, reducing corruption and providing greater regulatory certainty will be critical to attracting more sustainable foreign investment.
For Nigeria, the challenge is not only to attract capital but also to create an investment environment in which businesses can operate predictably, trade efficiently and commit resources to long-term growth.
