Nigeria has been ranked as the ninth top investment destination in Africa for 2024, according to the Rand Merchant Bank (RMB) and Gordon Institute of Business Science (GIBS)’s latest “Where to Invest in Africa” report. The ranking, which tracks the investment attractiveness of 31 African nations, places Nigeria behind countries like Seychelles, Mauritius, Egypt, South Africa, and Ghana.
While Nigeria’s economic potential remains significant, the report reflects concerns over its current investment climate. With an overall score of 0.163, Nigeria is recognized for its size and potential but lags in critical areas that influence investor confidence, such as market accessibility, innovation, and economic stability.
Despite ongoing efforts to diversify the economy and tap into its large and youthful population, the country’s ranking reveals the challenges it continues to face in creating a more favorable environment for foreign direct investment (FDI).
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Ranking Breakdown and Economic Potential
The RMB-GIBS report uses 20 metrics across four main pillars: economic performance and potential, market accessibility and innovation, economic stability and investment climate, and social and human development. These pillars collectively assess the attractiveness of each country as an investment destination.
Nigeria’s performance across these metrics offers a glimpse into the complex nature of its economy.
In terms of economic performance and potential—measuring factors like GDP growth, market size, and overall economic opportunities—Nigeria ranked second, only behind Egypt. This is not surprising given Nigeria’s status as Africa’s largest economy by GDP and its vast consumer market.
However, the country struggles significantly in other areas. For market accessibility and innovation, Nigeria ranked 29th, pointing to significant challenges around infrastructure, ease of doing business, and access to markets. These deficiencies have long been cited as barriers to investment and economic expansion.
Nigeria ranked 21st for economic stability and investment climate, reflecting ongoing issues with inflation, currency volatility, and political risks. For social and human development—factors related to education, health, and quality of life—Nigeria ranked 15th, showing moderate improvement but still trailing behind its peers in creating a robust human capital foundation for economic growth.
The Economic Backdrop
The ranking is seen as a reflection of Nigeria’s current economic situation. Despite its vast economic potential, Nigeria’s investment climate has been marred by a volatile economic backdrop, primarily driven by poor and inconsistent economic policies.
Since 2015, several multinational companies have exited Nigeria, citing an unfriendly business environment characterized by foreign exchange shortages, regulatory uncertainty, and poor infrastructure. Notable exits include Shoprite, Mr. Price, and Puma Energy, among others.
This trend has dampened investor confidence and exacerbated concerns over the country’s ability to attract and retain foreign businesses. Also, these exits reflect broader concerns within the business community about the difficulty of doing business in Nigeria, where erratic government policies have made long-term investment decisions increasingly risky.
In the critical oil and gas sector, Nigeria recorded zero foreign capital investments in the first quarter of 2024. According to the National Bureau of Statistics (NBS), the lack of investment in this sector is particularly concerning given that oil and gas remain the country’s primary revenue source.
Nigeria’s investment decline is compounded by several challenges. Poor handling of key economic indicators—such as inflation, foreign exchange rates, and debt management—has created a sense of uncertainty among potential investors. With inflation rates stubbornly high and the naira experiencing constant devaluation, foreign investors are wary of committing to long-term projects in Nigeria.
Experts have pointed out that Nigeria’s economic policies are often reactionary and lack coherence, contributing to the instability. For instance, the Central Bank of Nigeria’s foreign exchange management strategy, which previously involved multiple exchange rates, created confusion and limited access to dollars, further complicating trade and investment activities. While the floating of the naira in recent times has been welcomed by some, it has not been enough to reverse the years of capital flight or attract fresh investments.
Against this backdrop, economists are sounding the alarm over the lack of a clear and sustainable economic plan from the Nigerian government. While the country has launched initiatives such as the Economic Recovery and Growth Plan (ERGP) in 2017, these have often fallen short of expectations due to poor implementation and a lack of political will. Analysts note that the current government has yet to lay out a concrete roadmap for stabilizing the economy and restoring investor confidence.