The U.S. Department of State said removing fuel subsidies pushed petrol prices to five times their 2023 level and contributed to an estimated national poverty rate of 63 percent in 2025, warning American executives about investment risks in Nigeria. It called the reforms “painful but necessary,” while saying their “fiscal correction came at a high social cost.”
The department’s “2026 Investment Climate Statements on Nigeria” described economic reforms introduced by the President Bola Tinubu administration, including subsidy removal and foreign-exchange-market liberalisation. At first, those measures caused significant economic volatility. Some indicators in early 2026 suggested stabilisation, but the report said foreign investors still had to consider the social consequences.
Capital Inflows and Household Costs
Nigeria’s capital importation reached $21 billion in October 2025, a large increase from 2024, according to the report. Yet 92 percent of that capital was foreign portfolio investment seeking high interest rates; actual foreign direct investment in physical infrastructure remained modest. The report cautioned that rising capital importation didn’t necessarily signal a matching increase in long-term infrastructure investment.
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 between the United States and Nigeria reached $14.8 billion in 2025. Nigeria allows full foreign ownership in most sectors, the report said, though some industries have restrictions and licensing requirements.
Those investment figures came alongside substantial household costs. Nigeria’s gross domestic product growth rose from 3.3 percent in 2023 to 4.1 percent in 2024, then eased 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 reached 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 under the rebased index was 10.84 percent in December 2025. The report drew its poverty estimate from an April 2026 World Bank report.
Investment Risks and State Measures
“The security environment is a primary variable which gives pause to potential investors,” the report said. Attacks on oil infrastructure in the Niger Delta had decreased, but oil theft and illegal bunkering persisted. In northern Nigeria, the expansion of terrorist and “bandit” groups continued to degrade conditions for agribusiness and mining, it said.
The report also pointed to the nearly eight-month detention in 2024 of Tigran Gambaryan, a U.S. citizen and Binance employee, in a regulatory dispute. Coercive exit bans and detentions could shape foreign executives’ perceptions of Nigeria as an investment destination, it said.
Cargo dwell times at Apapa and Tin Can Island exceeded 20 days because officials relied on manual examinations. The report called port inefficiency a significant “hidden tax” on investment and identified corruption and administrative bottlenecks as barriers to trade. Lekki Deep Seaport handled $9.6 billion in trade in 2025 while operating at 50 percent capacity, helping ease pressure on older facilities.
The government launched the first phase 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. It targets cargo dwell times of fewer than seven days and aims to eliminate 80 percent of manual paperwork by the end of 2026.
Rules, Incentives and Uneven Implementation
The Nigerian Investment Promotion Commission’s One-Stop Investment Centre coordinates 27 government agencies to help investors navigate administrative processes. The report described Nigeria’s trade regime as “somewhat protectionist,” citing high tariffs and import restrictions intended to protect domestic industries. Some companies must invest in local production to receive permits and quotas to import the same products.
The department said efforts to improve the regulatory environment had met uneven implementation. “Nigeria’s regulatory environment has transitioned toward a ‘structural reset’ designed to improve predictability, though implementation remains uneven,” the report said. It also cited the shift from the Pioneer Status Incentive scheme to the Economic Development Tax Incentive, which took effect in January 2026, as requiring administrative adjustment by foreign businesses.