Nigeria Business &
Investment Environment Intelligence

Nigeria's economy grew 3.87% in real terms across 2025, accelerating through the year from 3.48% in Q2 to 4.07% in Q4.[NBS] The IMF's mid-year projection of 3.4% for 2025 — made in its July Article IV mission — was revised upward by actual NBS outcomes, with services, ICT, financial services, and agriculture all outperforming expectations.[IMF] Nominal GDP grew 18.78% in the first half of 2025, implying that inflation remained embedded in the headline figures even as real activity picked up.[NBS]

The structural story is what matters. Oil — which defined Nigeria's fiscal identity for fifty years — contributed just 2.87% of GDP by Q4 2025, down from a larger share in prior years as non-oil activity expanded faster. Services accounted for 55.92% of GDP in Q4, with ICT, financial services, real estate, rail (+33.29% year-on-year in Q3), and insurance (+20.78% in Q3) all posting strong numbers.[NBS] Agriculture surged to a 31.3% GDP share in Q3, with livestock growth doubling its Q2 rate. Manufacturing and industry slipped to a 15.77% share in Q3.

What this means for a business evaluator: Nigeria's economic growth is now structurally less dependent on a commodity price it cannot control. That is a meaningful shift. But the same nominal GDP growth figures that imply real gains also reflect inflationary conditions that erode consumer purchasing power — a tension that sits directly underneath every consumer-facing business model in the country.

Services — spanning ICT, financial services, trade, real estate, transportation, and insurance — held 55.92% of GDP in Q4 2025 and grew 4.15% year-on-year.[NBS] This is not a soft number. Rail transport grew 33.29% in Q3. Insurance grew 20.78%. Financial services expansion tracks directly to fintech penetration and digital payments infrastructure — an area where Nigeria leads the continent in transaction volume. The services sector's growth is structural, not cyclical.

Agriculture recovered sharply across 2025, driven by forestry, livestock, and crop cultivation rebounds. By Q3 it had reached a 31.3% GDP share — a 504 basis-point swing — making it the second-largest contributor to the economy.[NBS] The agro-processing opportunity follows directly from this: cassava, soybeans, and bakery inputs are all scaling production bases, and the gap between raw output and processed value-add remains wide. Industry — including manufacturing and construction — slipped to 15.77% in Q3, reflecting the persistent drag of high energy costs on production economics.

Oil's trajectory is the most telling number in the dataset. At 2.87% of GDP in Q4 2025 and output running at 1.64 million barrels per day — below government targets of 1.6–1.8 mbpd — the sector is both smaller and less reliable than government fiscal projections assume.[NBS] NNPC and Oando PLC remain the dominant operators, but private investment in upstream is constrained by regulatory uncertainty and global price softness. The Dangote refinery represents the most significant downstream investment in decades, but its effect on energy cost for manufacturers and consumers will take time to feed through.

The Corporate Affairs Commission completed a meaningful digitisation of the registration process, and by early 2026 a business name can be reserved within 24 hours and fully registered within a few days through the online portal.[CAC] Official fees for a business name run ₦11,000–₦18,000, covering name search, registration, and processing. Private company registration costs approximately ₦50,000. Free registration slots are available: SMEDAN announced 250,000 MSME registrations at no cost from September 2025, and the CAC itself offered 3,500 free slots in February 2026 for its 35th anniversary.[CAC] Tax identification is now issued automatically upon registration through the Nigeria Revenue Service (formerly FIRS), removing a step that previously required a separate application.

The distance between registration ease and operating ease is where Nigeria's business environment challenge lives. The World Bank's Doing Business index was discontinued in 2021, and its successor B-READY rankings are not yet available for Nigeria — this is a genuine data gap that makes direct cross-country comparison difficult. What the available data does show is that corporate income tax sits at 30% for large firms, VAT at 7.5%, and energy costs for manufacturers remain high enough to suppress margins across cement, food processing, and pharmaceutical production. No public record of named foreign company entries or exits in 2024–2026 was available in the research for this report — a gap that limits assessment of revealed business confidence among multinationals.

The CAMA 2020 reforms tightened governance requirements for private companies — introducing stricter compliance around beneficial ownership disclosure, electronic meetings, and shareholder rights — but detailed enforcement data for 2025 or 2026 is not publicly available. The gap between formal regulation and practical enforcement is itself a risk factor that experienced operators consistently identify in the Nigerian context.

Nigeria's e-commerce market reached $9.35B in 2025 and is projected to grow to $10.49B in 2026 — a 12.2% year-on-year increase.[Mordor] Business-to-consumer transactions account for 86.4% of market volume. Buy-now-pay-later (BNPL) volumes surpassed $1.78B in 2026, signalling that consumer credit demand within digital channels is scaling fast — and that the underlying consumer base is purchasing goods they cannot fully fund upfront, a dynamic with implications for both default risk and market depth.

Greater Lagos accounts for 39.3% of all e-commerce orders.[Mordor] Abuja and Port Harcourt together represent approximately 25.4% — meaning the top three urban clusters hold roughly 65% of all digital commerce in a country of 220 million people. Secondary cities are growing but are not yet generating investable volumes at the infrastructure layer. Same-day fulfilment logistics exist in Lagos and Abuja; they do not yet exist reliably elsewhere. For any operator whose model depends on national scale, this concentration is not a market opportunity — it is a sequencing problem.

Telecommunications and digital infrastructure are the enabling layer. 5G rollout is underway, data consumption is rising, and fintech integration into everyday payments has reached a level of penetration that makes Nigeria's digital financial services sector one of the most active on the continent. Fibre-optic infrastructure investment is attracting attention precisely because demand growth is not speculative — it is already visible in transaction volumes. ICT contributed meaningfully to services-sector GDP growth throughout 2025, and rail transport growth of 33.29% in Q3 suggests that physical logistics infrastructure is also beginning to move.[NBS]

Nigeria's power grid delivers unreliable supply to industrial and commercial users, forcing the majority of formal businesses to operate captive diesel or gas generators as a primary or backup energy source. This adds a cost layer — estimated at between 20–40% of operating costs for manufacturers, though no named Tier 1 source publishes a current Nigeria-specific figure — that does not exist for competitors in Ghana, Morocco, or Kenya at the same scale. The Dangote refinery, now operational, is the most significant downstream energy investment in decades and could reduce petroleum product import costs over time. But the refinery's effect on grid reliability and industrial electricity pricing will take years to materialise fully.

Gas development is a stated policy priority. The government's target of 1.6 million barrels per day of oil production is running slightly behind at 1.64 mbpd — actually above target in some quarters but volatile.[NBS] NNPC and Oando PLC are the dominant operators in upstream. Solar energy is attracting policy attention and private interest, particularly for off-grid and commercial installations, but no specific investment values or named deals were available in the research for this report. Rail logistics grew 33.29% in Q3 2025, suggesting that alternative freight infrastructure is beginning to function.[NBS]

For a business evaluating Nigeria as a manufacturing or heavy industry location, the honest assessment is this: energy cost is a structural disadvantage today, the policy direction is correct, but the timeline is genuinely uncertain. Services businesses — fintech, digital, consulting, media — face this constraint less acutely and explain in part why the services sector is where private capital is flowing.

President Tinubu's government removed the petrol subsidy in May 2023 and floated the naira shortly after — two structural reforms that economists had called for throughout the previous decade. The petrol subsidy consumed approximately ₦3–5 trillion annually in government expenditure; its removal freed fiscal space but accelerated inflation and compressed real consumer incomes in 2023–2024. The naira float was similarly necessary and similarly painful: the currency lost more than half its value in dollar terms within months, and FX volatility remained elevated through 2025. The IMF's 2025 Article IV mission acknowledged these as positive steps while flagging that sustaining them would require consistent institutional follow-through.[IMF]

Governance quality data from Transparency International and the World Bank's Government Effectiveness indicators was not available at a granular level in the research compiled for this report — a gap that caps the confidence of this section at MEDIUM. What the available evidence does show is that the gap between reform announcement and reform implementation is the defining governance challenge. CAMA 2020 introduced modern compliance requirements; enforcement is uneven. Tax digitisation via the Nigeria Revenue Service is progressing; compliance rates in the informal sector remain low by design.

Security conditions in the Niger Delta, north-east Nigeria, and parts of the north-west remain a material operational risk for agriculture, logistics, and energy businesses in those regions. This is not a new risk, but it is a persistent one that shapes where investment can realistically go and what insurance and operating cost assumptions are required.

The sectors attracting private investment interest in 2025–2026 are identifiable from policy signals, market data, and sector growth rates: fintech and digital payments infrastructure, fibre-optic and broadband networks, solar energy, agro-processing (particularly cassava and soybean value chains), and pharmaceutical manufacturing.[IFC] The government's oil sector reform targets 1.6 mbpd production, and gas infrastructure development is a stated priority — but specific private capital commitments for either were not publicly available in the research compiled for this report. No named foreign investor entries or exits with disclosed values were found for 2024–2026.

Geography matters more than sector alone. Lagos is the commercial capital, the financial centre, and the dominant digital economy hub — holding 39.3% of e-commerce orders and the majority of fintech company headquarters. Abuja is the political and administrative centre, attracting government-facing services, real estate, and professional services investment. Port Harcourt is the energy industry hub, with the oil and gas ecosystem anchoring most of its formal economy. Beyond these three, secondary cities are growing in digital commerce reach — same-day logistics are beginning to extend to Kano, Ibadan, and Enugu — but investable infrastructure at scale does not yet exist outside the top three clusters.

Nigeria's trade structure reflects its commodity dependence: oil accounts for the majority of export value, while manufactured goods, food, and machinery dominate imports. The Dangote refinery could reduce petroleum product imports materially — one of the largest items in Nigeria's import bill — once it reaches full operational capacity. No NIPC or NBS data with specific 2025–2026 FDI inflow figures by city or sector was available in the research for this report.

The 2025 GDP data establishes a credible growth baseline: 3.87% real growth, services-led, with agriculture recovering and oil stable at a lower structural share. The IMF's 2025 Article IV mission confirmed the reform direction as positive while noting that sustained progress requires institutional consistency.[IMF] PwC's Nigeria economic outlook identifies the same dynamic — macroeconomic stability is emerging, but the translation into broad-based private sector growth depends on energy reform, FX stability, and formal sector expansion.[PwC]

Three conditions would change the picture positively: a sustained reduction in grid energy costs for manufacturers (driven by gas infrastructure expansion and distributed solar), FX stability that allows naira-denominated businesses to plan 12–24 month cost structures with confidence, and continued CAC/tax digitisation that brings more SMEs into the formal economy and broadens the tax base. Three conditions would change the picture negatively: a reversal of petrol subsidy removal under fiscal or political pressure, security deterioration in agricultural producing regions that suppresses the agriculture recovery, or global oil price collapse that triggers an FX crisis despite the reduced oil dependency.

The honest probability distribution is asymmetric. The base case — 3.5–4.5% real growth, gradual reform progress, services-led expansion — is more likely than either the bull or bear extreme. Nigeria's demographic scale (220 million people, median age under 19) means that consumer demand growth is structural regardless of policy quality. The question is not whether Nigeria will grow — it is whether the formal economy will capture enough of that growth to reward investors who need returns in hard currency or at formal-sector margins.