Nigeria Exits Top African Investment Destinations Club Despite Reform Drive

…records biggest fall in 2025 RMB ranking

Nigeria has dropped out of the league of Africa’s top 10 investment destinations despite President Bola Tinubu’s market reforms aimed at reviving investor confidence and stabilising the economy.

According to the ‘Where to Invest in Africa 2025’ report published by Rand Merchant Bank (RMB), the country fell nine places—from ninth position in the previous edition to 18th, recording the biggest decline in the continent’s latest investment attractiveness ranking of 31 countries.

The report evaluated countries based on 20 indicators grouped under four key pillars: macroeconomic performance, market accessibility, innovation and stability, and human development.

“The significant decline in Nigeria’s ranking position may be directly linked to lower GDP figures in US dollar terms,” it said. “However, policy decisions and economic mechanics must be read with a long-term view and strategic intention in mind.”

This year’s ranking placed Seychelles at the top, followed by Mauritius, Egypt, South Africa, Morocco, Ghana, Algeria, Côte d’Ivoire, Tanzania, and Kenya. Nigeria’s exclusion from this list is a setback for Africa’s most populous country, which has struggled to convert its large consumer market and reform agenda into sustained investor confidence—particularly in terms of Foreign Direct Investment (FDI).

Reforms attract short-term portfolio inflows

In the second quarter of 2023, Tinubu’s government embarked on ‘bold’ measures to correct structural imbalances in Africa’s fourth biggest economy. The unification of the foreign exchange market and removal of the decades-long petrol subsidy have helped attract Foreign Portfolio Investment (FPI) inflows, even as inflationary pressures and poverty remain persistent.

According to data from the National Bureau of Statistics, total capital inflows surged to $5.6 billion in the first quarter of 2025, up 67.1 percent from $3.4 billion in the same period of 2024.

Portfolio investment dominated, accounting for 92.25 percent ($5.2 billion), while other investments made up 5.52 percent ($311.17 million).

FDI, however, remained weak, contributing only 2.24 percent ($126.29 million) of total capital importation.

Oil dependency and the GDP effect

RMB’s report also traced Nigeria’s long-standing structural vulnerability to its dependence on oil. “For nearly 70 years, Nigeria’s history and fortunes have been written in oil,” the report noted. Discovered in 1956 in present-day Bayelsa State, crude oil has dominated both the economy and politics.

Economist Doyin Salami describes Nigeria as “oil-dependent rather than oil-rich,” contrasting its trajectory with that of Saudi Arabia. The report illustrates this starkly:

“With a population of about 35 million, Saudi Arabia produced around 9 million barrels per day in 2024. Nigeria, with a population of 232 million, averaged only 1.5 million barrels daily. At a price of $67 per barrel, that equals $6,300 per Saudi compared to just $161 per Nigerian.”

This dependence on oil revenues and the volatility of crude prices continue to limit Nigeria’s ability to diversify its economy or sustain dollar-denominated growth.

Exchange rate shock, inflation risks

Tinubu’s currency reform—ending multiple exchange rates and adopting a unified, market-determined system in June 2023—triggered a sharp depreciation of the naira. The official rate plunged from ₦463.5/$ in mid-June 2023 to ₦897.5/$ by year-end, significantly impacting dollar-based GDP calculations.

RMB noted that this exchange-rate adjustment caused Nigeria’s nominal GDP (in US dollars) to fall from $374.9 billion in the 2024/25 edition of the report to $187.6 billion in 2024 before rebasing.

According to Central Bank of Nigeria data, the average official exchange rate rose to ₦1,450/$ in 2024, compared with ₦645.10/$ a year earlier.

In 2025, the naira traded mostly within the ₦1,500–₦1,600/$ range, strengthening to ₦1,480.3/$ as of September 26 and closing at ₦1,422.2/$ on October 31 at the official window.

Despite modest gains in investor sentiment, poverty remains a major drag on Nigeria’s human development pillar. The World Bank estimates that 139 million Nigerians—about 62 percent of the population—were living in poverty as of October 2025.

This widespread deprivation, coupled with insecurity and weak infrastructure, dampens productivity and discourages sustained foreign investment.