Foreign Direct Investment (FDI) inflows into Nigeria and several other developing countries have declined sharply, reaching their lowest levels since 2005. This downturn, according to recent global economic assessments, has been attributed to the growing wave of trade restrictions, investment protectionism, and mounting economic uncertainties across the globe.
FDI, which is widely regarded as a crucial driver of economic development, job creation, and improved standards of living, has historically played a significant role in supporting infrastructure, technology transfer, and capital expansion in emerging markets like Nigeria. However, recent figures show a disturbing retreat by global investors, signaling caution over geopolitical tensions, stringent policy environments, and inconsistent regulatory frameworks.
Economic analysts have warned that the fall in investment flows is likely to deepen the financial strain already being felt in Nigeria and similar economies. With inflation remaining high, local currencies under pressure, and sovereign debts climbing, reduced capital inflows could further stifle economic growth and reduce foreign exchange availability—critical for import-dependent economies.
In Nigeria’s case, multiple factors have contributed to waning investor confidence. These include concerns over insecurity, inconsistent government policies, cumbersome business registration processes, and a lack of clear protection for foreign investments. While the current administration has made attempts to boost ease of doing business and attract foreign capital through various reforms, results remain modest.
The United Nations Conference on Trade and Development (UNCTAD) recently noted that developing nations are disproportionately affected by global shifts in investment patterns, as advanced economies increasingly favour nearshoring and domestic reinvestment over outbound capital. Trade barriers, rising interest rates in developed markets, and economic nationalism have also made it more challenging for countries like Nigeria to remain competitive in attracting global capital.
Experts have now called for urgent and strategic reforms to reverse the declining trend, including strengthening legal protections for investors, improving infrastructure, ensuring political stability, and eliminating bottlenecks that discourage long-term foreign participation.
As developing economies continue to grapple with reduced inflows, the spotlight remains on how quickly and effectively nations like Nigeria can reposition themselves to regain investor trust and harness the full benefits of international capital in driving sustainable growth and development.