THE United States has cautioned American businesses considering investments in Nigeria about security threats, corruption, port delays and regulatory uncertainty, saying these challenges continue to undermine the country’s investment climate despite improvements in some economic indicators.
The warning is contained in the US Department of State’s 2026 Investment Climate Statements on Nigeria, which examined the effects of economic reforms introduced by President Bola Tinubu’s administration and the risks facing foreign investors.
According to the report, the removal of petrol subsidies and liberalisation of the foreign exchange market initially triggered significant economic disruption, although some indicators showed signs of stabilisation in early 2026.
However, the department said persistent insecurity, administrative inefficiencies and the social costs of the reforms remained major concerns for businesses seeking to operate in Africa’s fourth largest economy.
“The security environment is a primary variable which gives pause to potential investors,” the report stated.
It noted that attacks on oil infrastructure in the Niger Delta had declined, but crude oil theft and illegal bunkering remained unresolved. In northern Nigeria, the expansion of terrorist groups and armed bandits continued to threaten agribusiness, mining and other commercial activities.
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US raises concern over detention of executives
The report also warned that regulatory disputes could expose foreign executives to detention or restrictions on leaving Nigeria, citing the case of Tigran Gambaryan, an American executive with cryptocurrency exchange Binance who was detained in the country for nearly eight months in 2024.
It said the case could serve as a warning to foreign business leaders about the risks associated with confrontations between companies and regulatory authorities.
The department’s assessment suggests that uncertainty over how regulatory disputes are handled could influence investment decisions, particularly among companies operating in highly regulated sectors.
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Port delays increase business costs
Inefficiencies at Nigeria’s seaports were another major concern highlighted in the report, which described prolonged cargo clearance as a hidden cost on investment.
The Lekki Deep Seaport handled $9.6 billion in trade in 2025 and operated at about 50 percent capacity, helping to ease pressure on older port facilities.
However, cargo dwell times at Apapa and Tin Can Island ports remained above 20 days, partly because of manual cargo examination procedures.
To address the problem, the Federal Government launched the first phase of the National Single Window on March 27, 2026. The digital platform is designed to bring agencies such as the Nigeria Customs Service (NCS), the National Agency for Food and Drug Administration and Control (NAFDAC), and the Standards Organisation of Nigeria(SON) into a unified trade-processing system.
The initiative targets a reduction in cargo dwell time to fewer than seven days and an 80 percent cut in manual paperwork by the end of 2026.
The report said the success of the initiative would depend on effective implementation and coordination among the participating agencies.
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Portfolio inflows dominate capital importation
Although Nigeria recorded a significant increase in capital inflows, the US department cautioned that the figures did not necessarily indicate a comparable rise in long-term investment in factories, infrastructure and other productive assets.
The report put Nigeria’s capital importation at $21 billion in October 2025, noting that 92 percent consisted of foreign portfolio investment rather than foreign direct investment (FDI).
Portfolio investors typically move funds into financial assets such as government securities and equities, and their investments can be more sensitive to changes in interest rates, currency expectations and global financial conditions than long-term investments in physical businesses.
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The report said the dominance of portfolio flows highlighted the difference between attracting short-term financial capital and securing sustained investment in productive capacity.
It also noted that Nigeria generally permits full foreign ownership in most sectors, subject to restrictions and licensing requirements in certain industries. The Nigerian Investment Promotion Commission (NIPC)’s One-Stop Investment Centre coordinates 27 government agencies to help investors navigate administrative procedures.
US foreign direct investment in Nigeria reached $7.9 billion by the end of 2024, a 25 percent increase from the previous year, while bilateral trade between both countries totalled $14.8 billion in 2025, according to the report.
Corruption and policy uncertainty persist
The department identified corruption as a systemic obstacle to investment, particularly in port operations, where customs delays can increase costs and complicate trade.
It also described Nigeria’s trade regime as relatively protectionist, citing high tariffs and import restrictions designed to support local industries. In some sectors, companies must commit to domestic production to qualify for permits or import quotas for the same products.
While the government has introduced measures intended to make the regulatory environment more predictable, the report said implementation remained uneven.
It also highlighted the transition from the Pioneer Status Incentive to the Economic Development Tax Incentive, which took effect in January 2026, as an adjustment that could create administrative challenges for foreign businesses.
Reforms improve indicators but raise living costs
The US assessment acknowledged improvements in Nigeria’s macroeconomic indicators but said the reforms had imposed substantial costs on households.
It noted that petrol prices had risen sharply following the removal of subsidies, contributing to mounting pressure on household purchasing power. Citing an April 2026 World Bank report, it put Nigeria’s poverty rate at 63 percent in 2025.
Nigeria’s economic growth increased from 3.3 percent in 2023 to 4.1 percent in 2024 before easing to 4 percent in 2025, according to the report.
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The department also cited foreign exchange reserves of $50.45 billion in February 2026, which it described as a 13-year high.
Headline inflation, which reached 34.8 percent in late 2024, fell to 15.15 percent in 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 in the same month.
The report said the reform programme represented a structural shift intended to improve economic stability and policy predictability, but warned that inconsistent implementation and unresolved business risks could limit its benefits.
For American companies, the assessment points to a market with significant trade and investment opportunities but also substantial operational risks. Security conditions, regulatory enforcement, corruption, logistics costs and the durability of economic reforms remain important considerations in assessing potential investments in Nigeria.
