Temitayo Olumofe
The Nigerian economy has always attracted investors due to its large population and rich resources. However, recent events, especially the demolition of buildings in urban areas, have raised concerns about the investment climate. As of February 13, 2025, many investors are questioning the government’s commitment to creating a stable economic environment. The demolitions have left local and international investors anxious about their future in Nigeria.
The demolition of structures across Nigeria aims to enforce urban planning laws and reclaim public spaces. While this may sound positive, it has created fear among investors. Many businesses lost properties they invested in without adequate notice or compensation. Recently Paul Onwuanibe Ceo of Landmark Group was interviewed by a podcast where he spoke bitterly about how he lost and was hurt without compensation from the government for the damage done. Now it’s gone overnight without proper explanation or compensation. Stories like this make investors doubt whether their investments are safe.
These demolitions come at a challenging time for Nigeria. The country is already facing high inflation, currency depreciation, and rising unemployment. The uncertainty surrounding property rights adds to the worries of investors.
Nigeria’s economy has faced significant challenges in recent years. In 2024, inflation reached 28.4%, driven by rising food prices and the removal of fuel subsidies. The naira has also lost value due to changes in the foreign exchange market. These reforms aimed to stabilize the economy but have led to short-term pain for businesses and households.
Foreign direct investment (FDI) in Nigeria has been declining for over a decade. According to the United Nations Conference on Trade and Development (UNCTAD), FDI peaked at $8.4 billion in 2011 but fell to just $2.2 billion by 2022. Several factors contribute to this decline:
Regulatory Uncertainty: Investors often cite inconsistent policies as a major deterrent.
Security Concerns: Issues like terrorism and kidnappings make Nigeria a risky place for investment.
Infrastructure Deficits: Poor roads, unreliable electricity, and inadequate healthcare hinder business operations.
The recent demolitions add another layer of complexity to an already challenging investment climate. Investors are now questioning whether their assets are protected under Nigerian law or if they could face arbitrary actions from authorities.
Inflation is one of Nigeria’s most pressing economic challenges. Rising food prices have pushed many into poverty while businesses struggle with higher costs. The foreign exchange market changes were meant to attract capital by creating a single exchange rate system; however, they have led to significant volatility in the naira’s value. As of early 2023, one US dollar is worth about ₦900 on the official market—a sharp increase from ₦460 just two years ago. This depreciation makes it more expensive for businesses to import raw materials and machinery.
Despite these challenges, some sectors within Nigeria still offer significant investment opportunities such as:
Agriculture is crucial to Nigeria’s economy, employing over 30% of the workforce. However, inefficiencies in farming practices limit its potential. Agritech startups are introducing innovative solutions like precision farming tools and digital marketplaces for farmers. With vast arable land and a growing population that demands more food production, agritech presents an opportunity for investors looking to make an impact while earning financial returns.
Nigeria’s healthcare sector is another area ripe for investment. The COVID-19 pandemic exposed significant gaps in healthcare infrastructure, creating an urgent need for modern facilities and medical equipment. Public-private partnerships (PPPs) can help address these deficiencies while providing attractive returns for investors.
As global attention shifts towards sustainability, renewable energy projects in Nigeria are gaining interest. Solar power initiatives are transforming rural communities by providing electricity where none existed. With government incentives and international support for clean energy projects, this sector offers promising prospects for long-term investors.
To rebuild trust among investors and attract capital into the country, Nigeria must address several key issues – the government must ensure that property rights are respected under Nigerian law. Transparent processes for urban planning enforcement such as providing adequate notice before demolitions are essential to restoring confidence among property owners and businesses.
Also investors need stability when making long-term decisions. The government should prioritize clear communication about its policies and avoid abrupt changes that could disrupt business operations.
Improving infrastructure is also critical for attracting investment across various sectors. Public-private partnerships (PPPs) can help bridge funding gaps while ensuring efficient project execution and addressing security challenges is necessary if Nigeria hopes to attract more FDI. Enhanced policing efforts combined with community-based initiatives could help reduce crime rates across the country.
Despite these challenges, Nigeria’s stock market has shown resilience in early 2025. The Nigerian Exchange Limited (NGX) reported an increase in market capitalization by N1.95 trillion during January alone—a sign that some investors remain optimistic about the country’s long-term prospects.
However, analysts caution that this growth may not be sustainable without broader economic reforms. Tajudeen Olayinka, an investment banker and stockbroker, noted that “the outlook for Nigeria’s stock market remains optimistic if strategic reforms are implemented consistently.” As Nigeria faces the aftermath of landmark demolitions and broader economic challenges, it finds itself at a turning point. The decisions made by policymakers will determine whether the country can regain its status as a top destination for investment or continue down a path of uncertainty.
While there are opportunities within sectors like Agri-tech, healthcare, and renewable energy, these prospects will remain untapped unless fundamental issues such as regulatory unpredictability and infrastructure deficits are addressed head-on. Investors will be watching closely as Nigeria navigates this uncertain horizon—hoping for signs that stability can be restored in one of Africa’s most promising yet challenging markets.
Furthermore, the role of international organizations and development partners will be crucial in this journey. By providing technical assistance and financial support, these entities can help Nigeria implement necessary reforms. Additionally, fostering dialogue between the government and the private sector can lead to more inclusive policies that benefit all stakeholders. Ultimately, a collaborative approach could pave the way for a more resilient economy that attracts sustainable investments and fosters long-term growth for the nation.
