Nigeria’s strategic investment policy for the 21st century: A blueprint for sustainable growth

BY VICTOR LIMAN AND ADE ADEFEKO

In the heart of Africa, Nigeria stands as a beacon of economic potential, rich in natural resources, a burgeoning youthful population, and an expanding market. Yet, the nation’s path toward sustainable growth has been anything but linear. From oil dependence to fluctuating foreign direct investment (FDI), Nigeria’s economic narrative has been defined by cycles of boom and bust. However, as the global economy pivots towards sustainability, innovation, and diversification, Nigeria’s strategic investment policy is poised to become a critical tool in shaping the country’s future.

The 21st century presents Nigeria with an unprecedented opportunity to recalibrate its investment policy, moving beyond resource extraction to foster industrialization, technological innovation, and inclusive growth. This shift is not just about attracting foreign capital but about channelling it into sectors that create long-term value, reduce inequality, and bolster resilience in the face of global economic shocks.

Nigeria’s economic structure, heavily reliant on oil and gas, has long been a double-edged sword. While oil revenues account for over 50% of government income and 90% of export earnings, this dependence leaves the country vulnerable to price volatility and market disruptions. The 2014 global oil crash and the subsequent recession in 2016 underscored the urgency of diversifying Nigeria’s economy.

President Bola Ahmed Tinubu’s administration has recognized this vulnerability, signalling a shift towards non-oil sectors, including agriculture, manufacturing, technology, and renewable energy. A strategic investment policy must now address the structural imbalances that have stifled growth for decades, ensuring that investments align with national development goals, such as those outlined in the National Development Plan 2021-2025.

Infrastructure remains the backbone of any thriving economy. Nigeria’s $100 billion infrastructure deficit poses a formidable barrier to growth. Inadequate power supply, poor transport networks, and underdeveloped digital infrastructure deter investors and constrain local enterprises.

To address this, Nigeria must prioritize Public-Private Partnerships (PPPs) to finance large-scale infrastructure projects. The Lekki Deep Sea Port, completed in 2023, exemplifies how strategic partnerships can catalyse economic growth by boosting trade and easing supply chain bottlenecks. Expanding such models to sectors like transportation, housing, and renewable energy will position Nigeria as a key player in West Africa’s industrial revolution.

Nigeria’s tech ecosystem, dubbed “Africa’s Silicon Valley,” has attracted global attention. In 2021 alone,

Nigerian tech startups secured over $1.5 billion in venture capital, outpacing other African nations. Companies like Flutterwave and Andela are not only transforming fintech and talent outsourcing but also demonstrating the potential of a digitally-driven economy.

However, sustaining this momentum requires robust digital infrastructure and policies that protect intellectual property, foster innovation, and create an enabling environment for startups. Strategic investment in 5G technology, broadband expansion, and e-governance platforms will further unlock Nigeria’s digital potential, driving economic growth and creating millions of jobs.

As the world accelerates towards net-zero emissions, Nigeria must reposition itself as a leader in renewable energy. Despite being the largest oil producer in Africa, over 40% of Nigeria’s population lacks access to electricity. Solar, wind, and hydropower projects present immense opportunities for investment, offering a sustainable solution to Nigeria’s energy crisis.

The Desert to Power initiative, driven by the African Development Bank (AfDB), aims to transform the Sahel region into a renewable energy hub, and Nigeria must seize this opportunity to expand its green energy footprint. A strategic investment policy should incentivize renewable energy projects through tax breaks, low-interest loans, and investor-friendly regulatory frameworks.

Agriculture employs over 35% of Nigeria’s workforce, yet the sector operates below potential due to outdated practices and inadequate value chain integration. Investments in agro-processing and mechanization can unlock higher productivity, reduce post-harvest losses, and enhance food security.

The government’s Anchor Borrowers’ Program, aimed at boosting agricultural production, demonstrates how targeted investments can revitalize the sector. Expanding such initiatives to cover cash crops, livestock, and fisheries will drive export diversification and rural development.

Despite Nigeria’s potential, several barriers hinder investor confidence:

• Regulatory Uncertainty – Frequent policy reversals create unpredictability for The Petroleum Industry Act (2021) was a step in the right direction, but similar reforms are needed across other sectors.
• Security Concerns – Insecurity, particularly in the northeast, remains a critical A stable security environment is essential for attracting and retaining investment.
• Bureaucratic Red Tape – Streamlining business registration, customs processes, and land

acquisition can significantly improve Nigeria’s ease of doing business ranking.

Nigeria’s strategic investment policy must leverage regional integration under the African Continental Free Trade Area (AfCFTA). With access to a market of 1.3 billion people, Nigeria can position itself as a manufacturing and export hub for West Africa.

Developing regional value chains, particularly in pharmaceuticals, textiles, and automobiles, will attract FDI and foster job creation. Nigeria’s automotive industry, with major players like Innoson Motors, exemplifies how regional demand can drive industrial growth.

Strong institutions and transparent governance are essential for sustaining investor confidence. Nigeria must strengthen anti-corruption measures, enhance judicial independence, and promote fiscal accountability. The Nigerian Sovereign Investment Authority (NSIA) has made strides in managing oil revenues transparently, but scaling such governance frameworks across all sectors is imperative.

Nigeria stands at a critical juncture. By embracing a strategic investment policy rooted in sustainability, innovation, and inclusivity, the nation can unlock its full economic potential. The future demands policies that not only attract FDI but also empower local enterprises, drive industrialization, and address social inequalities.

As Africa’s largest economy, Nigeria’s trajectory will shape the continent’s economic landscape. Through visionary leadership and strategic partnerships, Nigeria can build a resilient, diversified economy that thrives in the 21st century.

Liman was the former Chief Trade Negotiator of Nigeria and Acting Director General, Nigerian Office for Trade Negotiations. He was also the Head and Trade Commissioner, Nigeria Regional Investment and Trade Office, Shanghai, China; with concurrent mandate to oversee the South Asian countries’ trade relations with Nigeria ([email protected])

Adefeko is director of corporate and regulatory affairs at Olam Agri, Chairman of the Industrial Group, Lagos Chamber of Commerce and Industry (LCCI), and honorary consul of Botswana in Lagos ([email protected])