Nigeria's market-oriented reforms are showing results, but insecurity, corruption and clogged ports still give foreign investors pause, according to a new U.S. Department of State assessment. The department's "2026 Investment Climate Statements on Nigeria" credited the Tinubu administration with "painful but necessary" structural changes. It also warned American executives about the risks of doing business there.
The Reforms and Their Price
President Bola Tinubu's government removed fuel subsidies and liberalised the foreign exchange market. Both moves caused significant economic volatility at first. By early 2026, the numbers pointed to some stabilisation.
Gross domestic product 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, which the report described as a 13-year peak. 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 under the rebased index.
The household bill was steep. "The fiscal correction came at a high social cost," the report said. Petrol prices "quintuple[d] from 2023 levels," contributing to an estimated national poverty rate of 63 percent in 2025, the report said, citing an April 2026 World Bank report.
Security and Rule-of-Law Concerns
"The security environment is a primary variable which gives pause to potential investors," the report 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.
The report also pointed to how foreign executives are treated. It cited the nearly eight-month detention in 2024 of Tigran Gambaryan, a U.S. citizen and Binance executive. "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. Cases like that could shape how Nigeria is perceived as an investment destination.
Ports, Protectionism and Paperwork
"Port inefficiency remains a significant 'hidden tax' on investment," the report said. Lekki Deep Seaport handled $9.6 billion in trade in 2025 and operated at 50 percent capacity, easing pressure on older facilities. At Apapa and Tin Can Island, cargo dwell times exceed 20 days because of manual examinations.
The government launched phase one of the National Single Window on March 27, 2026. The platform aims to bring trade agencies, including the Nigeria Customs Service, the National Agency for Food and Drug Administration and Control, and the Standards Organisation of Nigeria, into one digital workflow. Its goal: cut cargo dwell time to fewer than seven days and eliminate 80 percent of manual paperwork by the end of 2026.
Corruption remains a persistent barrier, the report said, including at ports where customs delays impede trade. It described Nigeria's trade regime as "somewhat protectionist," citing high tariffs and import restrictions meant to shield domestic industries. Some companies must invest in local production to get permits and quotas to import the same products.
The regulatory picture is mixed. "Nigeria's regulatory environment has transitioned toward a 'structural reset' designed to improve predictability, though implementation remains uneven," the report said. The shift from the Pioneer Status Incentive scheme to the Economic Development Tax Incentive, effective January 2026, requires administrative adjustment by foreign businesses.
Where the Money Is Going
Capital importation reached $21 billion in October 2025, a large jump from 2024. But the report said the rise didn't necessarily mean a matching increase in long-term physical-infrastructure investment. Ninety-two percent was foreign portfolio investment chasing high interest rates. Actual foreign direct investment in physical infrastructure remained modest.
There are positives. Nigeria permits full foreign ownership in most sectors, subject to restrictions in some industries and licensing requirements. The Nigerian Investment Promotion Commission's One-Stop Investment Centre coordinates 27 government agencies to help investors through administrative processes. U.S. foreign direct investment in Nigeria reached $7.9 billion by the end of 2024, up 25 percent from the previous year. Bilateral trade hit $14.8 billion in 2025.
Why This Matters:
Nigeria's reform story shows what happens when a government trades subsidies for market pricing: macroeconomic discipline arrives, but household pain follows, alongside a 63 percent poverty estimate. The State Department's findings suggest fixing the books isn't enough. Investors want secure roads, predictable courts and ports that move cargo. With 92 percent of recent capital inflows parked in portfolio investment chasing high interest rates, Nigeria's stability depends on money that can leave quickly, not factories and infrastructure that stay. For American firms weighing exposure, the detention of a U.S. executive and the "hidden tax" of port delays are concrete costs. Whether the National Single Window meets its end-of-2026 targets will test if Abuja can match reform ambitions with execution.