Nigeria’s estimated poverty rate reached 63 percent in 2025, even as the economy grew and foreign exchange reserves climbed. That’s the sharpest takeaway from the U.S. Department of State’s “2026 Investment Climate Statements on Nigeria,” which says the “fiscal correction came at a high social cost,” citing an April 2026 World Bank report.
The department’s report credits President Bola Tinubu’s administration with “painful but necessary” structural reforms. Removing fuel subsidies and liberalising the foreign exchange market caused significant economic volatility at first, though early 2026 indicators suggested some stabilisation. Households paid a steep price. Petrol prices, the report said, “quintuple[d] from 2023 levels.”
Who Bears the Cost
The macroeconomic numbers look better than daily life for most Nigerians. GDP growth rose from 3.3 percent in 2023 to 4.1 percent in 2024, then eased slightly to four percent in 2025. The Central Bank of Nigeria reported foreign exchange reserves of $50.45 billion in February 2026, a 13-year peak, according to the report. Headline inflation hit 34.8 percent in late 2024 before falling to 15.15 percent by December 2025, following the rebasing of the Consumer Price Index and subsequent methodological changes. Food inflation stood at 10.84 percent in December 2025 under the rebased index.
Still, the report said, the surge in capital importation to $21 billion in October 2025 didn’t necessarily signal more long-term investment in physical infrastructure. Some 92 percent was foreign portfolio investment chasing high interest rates. Actual foreign direct investment in physical infrastructure stayed modest.
Security, Corruption and a ‘Hidden Tax’
The report is blunt about what keeps investors cautious. “The security environment is a primary variable which gives pause to potential investors,” it said. Attacks on oil infrastructure in the Niger Delta have decreased, but oil theft and illegal bunkering persist. “In the North, the expansion of terrorist and ‘bandit’ groups continues to degrade the climate for agribusiness and mining,” the document said.
Corruption remains a persistent barrier, including at ports, where customs delays impede trade. “Port inefficiency remains a significant ‘hidden tax’ on investment,” the report said. At Apapa and Tin Can Island, cargo dwell times exceed 20 days because of manual examinations. Lekki Deep Seaport handled $9.6 billion in trade in 2025 and operated at 50 percent capacity, easing pressure on older facilities.
The government launched phase one of the National Single Window on March 27, 2026. The digital platform aims to bring agencies including the Nigeria Customs Service, the National Agency for Food and Drug Administration and Control, and the Standards Organisation of Nigeria into one workflow. It aims to cut cargo dwell time to fewer than seven days and eliminate 80 percent of manual paperwork by the end of 2026.
Detention Case Raises Rights Questions
The report also pointed to the nearly eight-month detention in 2024 of Tigran Gambaryan, a U.S. citizen and Binance employee. “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,” it said. Such cases could affect perceptions of Nigeria as an investment destination.
The department described the trade regime as “somewhat protectionist,” citing high tariffs and import restrictions. Some companies must invest in local production in exchange for permits and quotas to import the same products. Nigeria permits full foreign ownership in most sectors, subject to some restrictions and licensing requirements, but the report said the regulatory environment has moved toward a “structural reset” designed to improve predictability, “though implementation remains uneven.” The shift from the Pioneer Status Incentive scheme to the Economic Development Tax Incentive, effective January 2026, requires administrative adjustment by foreign businesses.
There are positives. U.S. foreign direct investment in Nigeria reached $7.9 billion by the end of 2024, up 25 percent from the previous year, and bilateral trade hit $14.8 billion in 2025. The Nigerian Investment Promotion Commission’s One-Stop Investment Centre coordinates 27 government agencies to help investors navigate administrative processes.
Why This Matters: Washington’s own assessment lays out a hard tradeoff: reforms that steadied reserves and cooled inflation also pushed an estimated 63 percent of Nigerians into poverty, with petrol prices up fivefold. Growth figures and record reserves say little about who absorbs the shock. The report suggests investors are wary for reasons that overlap with ordinary Nigerians’ worries: insecurity in the North, corruption at the ports, and uneven enforcement of rules. Public institutions will have to fix those problems. With 92 percent of recent capital inflows tied to portfolio investment rather than physical infrastructure, jobs and services that could ease household strain depend on whether the state can deliver security, clean customs, and predictable regulation.