By Seun Ibiyemi
Nigeria recorded a major rebound in foreign direct investment (FDI) inflows in 2025, rising by 148.2 per cent to $4.005 billion from $1.614 billion in 2024, but the country must urgently diversify investment beyond oil and gas transactions to achieve sustainable economic transformation.
This was contained in the latest BACITI Economic Insight July 2026 report by the Bashir Adeniyi Centre for International Trade and Investment (BACITI) of the Nigerian Institute of International Affairs (NIIA), which examined the implications of the 2026 World Investment Report by the United Nations Trade and Development (UNCTAD).
The report noted that while global foreign direct investment recovered in 2025 after two consecutive years of decline, Africa’s share of global investment weakened significantly.
Global FDI increased by six per cent from $1.532 trillion in 2024 to $1.624 trillion in 2025, while inflows into Africa fell by 26 per cent from $94 billion to $70 billion.
According to BACITI, Nigeria emerged as one of Africa’s strongest performers despite the continental decline, accounting for approximately 5.8 per cent of Africa’s FDI inflows in 2025.
However, the report cautioned that Nigeria’s recovery was largely driven by major energy-sector transactions rather than broad-based investment expansion.
The report identified oil, gas, refining, mining and related energy infrastructure as the main drivers of Nigeria’s FDI rebound, including major transactions such as Renaissance Africa Energy’s acquisition of Shell’s onshore business and Huaxin Cement’s acquisition of Lafarge Africa.
BACITI warned that while these investments are economically important, they do not automatically translate into new production capacity, employment opportunities, technology transfer or stronger domestic supply chains.
“The central policy challenge is therefore not simply to increase FDI, but to change its quality, sectoral composition and domestic economic linkages,” the report stated.
The report stressed that Nigeria’s large market size alone would not guarantee sustained investment inflows, as investors are increasingly considering factors such as reliable electricity, infrastructure, logistics efficiency, regulatory certainty and security when making investment decisions.
BACITI recommended that Nigeria leverage energy-related investments to develop wider industrial value chains, including gas-to-power, fertiliser, petrochemicals, industrial manufacturing, engineering and export-oriented production.
The report also urged the country to move from broad investment promotion to a targeted strategy focused on investment-ready projects, improved trade facilitation, stronger domestic supplier networks and policies that encourage technology transfer and local value addition.
BACITI concluded that Nigeria should measure FDI success not only by the volume of capital inflows but by the productive capacity created, including new industries, skilled employment, non-oil exports, domestic processing and stronger participation of Nigerian businesses in global value chains.
