Can Nigeria attract foreign investment while businesses fear regulatory harassment and arbitrary detention?

By Ugonnabo Ngwu

Nigeria wants foreign investors to bring their money, establish businesses, create jobs and contribute to economic growth. Yet, a fresh warning from the United States government has raised questions about whether the country is doing enough to make foreign businesses feel safe, protected and confident in its investment environment.

The warning, contained in the US Department of State’s 2026 Investment Climate Statement on Nigeria, highlighted concerns about the alleged use of detention, travel restrictions and regulatory investigations to pressure foreign companies during commercial disputes. It also identified corruption, insecurity and administrative bottlenecks as persistent challenges facing businesses operating in the country.

For a country working to attract international capital and strengthen its economy, the concerns go beyond diplomatic disagreement. They touch on a fundamental question that investors must consider before committing their money: can a business operate in Nigeria without fearing that a commercial dispute could turn into a prolonged legal or regulatory ordeal?

The issue is particularly important at a time when Nigeria is trying to rebuild investor confidence following years of economic difficulties, currency instability and rising operating costs.

Under President Bola Tinubu, the Federal Government has introduced significant economic reforms, including the removal of petrol subsidies and changes to the foreign exchange system. Although these measures were intended to address longstanding economic weaknesses, they have also placed considerable pressure on households and businesses.

The government needs investment to support industrial expansion, improve infrastructure and generate employment. However, attracting investors requires more than announcing reforms or promising favourable business conditions. It also requires institutions that operate transparently, enforce regulations consistently and protect legitimate commercial interests.

The recent American warning suggests that concerns about Nigeria's investment climate extend beyond inflation, taxation and the cost of doing business.

One of the most troubling issues raised in the report is the alleged use of travel restrictions and detention during commercial or regulatory disputes. According to the American assessment, such measures have previously been used to pressure multinational companies into resolving disagreements or making financial concessions.

These are serious allegations, and they deserve careful examination. Regulatory authorities have legitimate responsibilities to investigate suspected wrongdoing, enforce tax obligations and ensure that businesses comply with Nigerian laws. Foreign companies should not be exempt from accountability simply because they bring investment into the country.

However, the existence of regulatory powers does not remove the need for due process, proportionality and respect for the rights of individuals.

When business executives believe that an ordinary commercial disagreement could expose them to arbitrary detention or restrictions on their movement, the consequences may extend far beyond the individuals involved. Corporate headquarters may reconsider expansion plans, investors may demand stronger safeguards, and businesses may choose to direct their capital towards countries they consider less risky.

Nigeria has already witnessed how a dispute involving a prominent international company can attract global attention.

In February 2024, Tigran Gambaryan, an American executive associated with cryptocurrency exchange Binance, was detained after travelling to Abuja for meetings with Nigerian officials. His passport was seized, and he was subsequently transferred to Kuje Prison, where he remained for approximately eight months before the charges against him were withdrawn on humanitarian grounds in October 2024. The American government has since cited the case as a cautionary example for foreign business representatives.

The circumstances surrounding that case were complex, involving allegations against the company and Nigerian authorities' efforts to address regulatory concerns. Nevertheless, its international visibility demonstrates how individual disputes can influence perceptions of an entire investment destination.

For foreign companies considering Nigeria, the question is not simply whether the country offers profitable opportunities. It is also whether disagreements can be resolved through transparent procedures without unnecessary threats to personal freedom or business operations.

That distinction matters because investors rarely make decisions based on economic potential alone.

A country may possess abundant natural resources, a large consumer market and a growing population, but these advantages can lose some of their appeal when businesses struggle to predict how regulations will be applied or how long disputes will take to resolve.

Nigeria's investment challenges are not limited to regulatory uncertainty. The American assessment also highlighted corruption, insecurity and inefficiencies at seaports as obstacles to business activity.

For importers, manufacturers and exporters, delays at ports can increase storage expenses, disrupt supply chains and make contracts more difficult to fulfil. Businesses may have to pay additional costs simply to move goods through the system.

The report described port inefficiency as a hidden tax on investment, drawing attention to the burden that administrative delays place on companies. It also noted that the government had introduced the National Single Window initiative to simplify trade procedures and reduce paperwork.

These challenges can be particularly damaging to smaller companies, which often lack the financial resources to absorb unexpected expenses or prolonged operational disruptions.

Security presents another major concern. Businesses operating in parts of northern Nigeria face risks associated with terrorism, banditry and attacks that threaten workers, transport routes and commercial activities. Such conditions can discourage investment in agriculture, mining, manufacturing and other sectors capable of generating employment.

The combined effect of these problems can create a business environment in which investors must account for risks beyond ordinary commercial competition.

Yet, it would be misleading to suggest that Nigeria has nothing to offer international investors.

The country has a substantial domestic market, significant natural resources, a growing technology sector and considerable opportunities in agriculture, energy, manufacturing and financial services. Its economic reforms have also attracted attention from investors seeking opportunities in Africa's largest economy by population.

According to the American government's investment assessment, US foreign direct investment in Nigeria reached $7.9 billion at the end of 2024, while bilateral trade between the two countries amounted to $14.8 billion in 2025. These figures demonstrate that commercial relationships continue despite the concerns identified in the report.

However, the country must distinguish between attracting money temporarily and building lasting investment relationships.

Short-term financial investments can move quickly in response to interest rates, currency expectations and changes in market conditions. Long-term investments in factories, energy projects, logistics infrastructure and agricultural processing require a different level of confidence.

An investor building a factory cannot easily relocate it when policies change unexpectedly. Such a commitment depends on confidence that contracts will be respected, disputes will receive impartial consideration and regulations will remain sufficiently predictable to support long-term planning.

This is where Nigeria must demonstrate that its economic reforms extend beyond monetary and fiscal policies.

The government should strengthen transparent procedures for regulatory investigations, ensure that allegations of wrongdoing are handled through established legal channels and prevent the misuse of enforcement powers. Tax disputes and commercial disagreements should be resolved through credible administrative processes and independent courts.

Regulatory agencies must also communicate their requirements clearly, while businesses should be given reasonable opportunities to respond to allegations and challenge decisions through lawful procedures.

At the same time, the authorities must address corruption at ports and other public institutions, improve security and reduce unnecessary bureaucratic obstacles. Reforms will have limited impact if businesses continue to encounter inconsistent enforcement or unexpected administrative demands.

The Federal Government must also recognise that investor protection benefits Nigerian businesses as much as foreign companies.

Local entrepreneurs face many of the same problems, including unpredictable policies, expensive logistics, delayed approvals and difficulties resolving commercial disputes. Improving the country's institutional framework would help domestic businesses expand, employ more workers and compete more effectively.

Ultimately, Nigeria cannot build a strong investment reputation through international roadshows and investment summits alone. Its credibility will depend on what investors experience when they arrive, establish businesses, employ workers and interact with government institutions.

The American warning should therefore be treated neither as a verdict that Nigeria is incapable of attracting investment nor as criticism that can simply be dismissed. It is an opportunity to examine weaknesses that could undermine the country's economic ambitions if left unresolved.

Nigeria needs foreign capital, but investors also need confidence that their money, businesses and fundamental rights will receive lawful protection.

The country has the market, resources and entrepreneurial energy to attract substantial investment. What remains essential is a business environment in which regulation does not become intimidation, accountability does not become arbitrary punishment, and commercial disagreements do not undermine confidence in the rule of law.

The real test is not whether Nigeria can persuade investors to enter the country. It is whether the country can give them enough confidence to stay, expand and encourage others to follow.