Despite its status as Sub-Saharan Africa’s largest economy and most populous nation, Nigeria has not established itself as a significant contributor to foreign direct investment (FDI) or remittance flows within the region, according to the World Bank’s Global Economic Prospects 2025 report.
The report highlights that while Nigerian banks have expanded their operations across the continent, the country’s overall contributions to regional investment and financial flows remain modest. This disparity between Nigeria’s economic size and its limited role in intraregional trade and investment underscores untapped potential.
The World Bank noted Nigeria’s modest role as an export destination within Sub-Saharan Africa and its relatively small contribution as a source of FDI or remittances.
The report stated: “Despite having the largest economy and population in SSA, Nigeria has a modest intraregional role as an export destination and does not yet have a substantial role as a source of FDI or remittances, although its banks have a regional presence.”
According to earlier reports from the World Bank, Nigeria’s economy is projected to grow by 3.5% in 2025 and 3.7% in 2026, driven by increased activity in the services sector and gradual macroeconomic improvements.
In 2024, growth reached an estimated 3.3%, buoyed by robust performance in financial and telecommunications services, as well as fiscal and monetary reforms that boosted business confidence.
The projected growth for 2025 and 2026 is expected to be supported by a rebound in consumer spending, aided by declining inflation following the Central Bank of Nigeria’s monetary policy tightening in 2024.
It is also expected to be supported by modest increases in oil production, though output will likely remain below Nigeria’s OPEC quota.
Despite the economic growth, Nigeria faced challenges in attracting foreign investments in the third quarter of 2024. Total capital importation declined by 51.90% from Q2 2024, falling to $1.25 billion. However, the figure still represented a 91.35% year-on-year increase from Q3 2023.
Key highlights of Q3 2024 capital inflows include portfolio investments accounted for $899.31 million (71.79%), reflecting strong interest in Nigerian equities and bonds. Other investments contributed $249.53 million (19.92%), while foreign direct investment (FDI) was significantly lower, amounting to just $103.82 million (8.29%).
The United Kingdom remained the largest source of capital inflows, contributing $502.60 million (40.12%), followed by South Africa with $185.03 million (14.77%) and the United States with $163.86 million (13.08%).
Lagos maintained its dominance as the primary destination for capital inflows, receiving $650.41 million (51.92%) in Q3 2024. The Federal Capital Territory (FCT), which includes Abuja, attracted $600.02 million (47.90%), highlighting the strategic importance of Nigeria’s political and economic hubs.
While Nigeria’s growing services sector and fiscal reforms signal progress, its limited role in intraregional investment and low FDI inflows point to areas needing improvement.
Strengthening Nigeria’s regional economic influence and attracting long-term investment could unlock its full potential as a leading driver of Sub-Saharan Africa’s economic growth.
