As the dust settles after a fractious election, what are the opportunities for investment in Nigeria?

John McIIroy | 03 Mar 2023 | General

Nigeria is the largest economy in Africa and accounts for 20% of the continent’s household consumption. This week’s election results completed the biggest democratic exercise in Africa but did little to unite the country.

Bola Tinubu won the presidential election with 37% of the vote, to extend the rule of the All Progressive Congress party which has held power since 2015. However, the country remains fractured around regional and religious blocs and it will be a major challenge to unite politicians after a hotly disputed election process.

Future challenges need foreign investment

As Tinubu takes control of Nigeria, he will be well aware of the problems facing the country: food inflation; public debt; unemployment; a young population; and an over-dependence on an inefficient oil industry.

The oil industry in particular has been as much a hindrance as a windfall. Commodity booms over the past fifty years have typically shifted employment towards natural resources to the detriment of important industries such as agriculture and manufacturing.

Attempts to create a more diverse economy are not new in Nigeria. If it is to be successful this time, the government needs a greater focus on long-term development strategies rather than short-term fixes that have traditionally held back growth in other sectors.

Foreign direct investment can play a part in this diversification and three sectors with potential include:

  • Digital economy – Almost half of all FDI into Nigeria (48%) in the last ten years can be linked to the digital economy (Software and IT, financial and business services, communications). A look at the motivations of these investors shows that Nigeria’s young, tech-savvy population is an attractive market for digital and financial companies. Alongside the current market, the continued growth in internet usage and mobile banking will make this an even more attractive market for investors.
  • Food and drink – Agri-entrepreneurs have benefited from initiatives such as the Anchor Borrowers’ Programme, which provides agricultural loans to farmers. These need to be connected to the larger value chain and foreign investment represents an opportunity to scale production. Currently, 85% of food and drink FDI into Nigeria is focussed on manufacturing and logistics, with almost half of investors from Western Europe.
  • Sustainable energy – Energy diversification is essential for Nigeria to move away from oil production. Nigeria has huge potential for renewable energy, with one report describing it as ‘much larger than the public or policymakers realise.’ However, achieving this will require increased investment in research, energy production, and infrastructure. With the correct investment planning in place, this could be a developing market to attract new investment.

Investment attraction strategies to survive in a competitive world

Attracting foreign investment is more competitive than ever. Investment agencies need a clear strategy to articulate what they are offering and who they are targeting. They also need to ensure they have the internal capabilities to attract investors, work with them to get projects over the line, and expand in the future.

For Nigeria to support diversification through international investment, it will need to develop a new strategy and enhance internal capabilities. But all of this will need to be accompanied by the political stability that investors crave.

The ability of Bola Tinubu to bring about this stability will be the first step towards diversification.


Financial Times (2023) FDiMarkets database
BBC (2023) Nigeria election 2023: Charts that explain the nation
IMF (2022) Diversification of the Nigerian Economy
Iseoluwa Akintunde (2022) Nigeria’s Recovery Means Rethinking Economic Diversification, Chatham House
The SUNGAS project (2012) Renewable Energy Potential in Nigeria