Nigeria returns to Africa’s top five FDI destinations as inflows double to $4bn

…rises year on year by 148% in 2025

Nigeria re-entered Africa’s top five destinations for long-term capital inflows last year after Foreign Direct Investment (FDI) inflows more than doubled to a decade high of $4.01 billion, supported largely by oil and gas-related international project finance deals.

BusinessDay analysis of the World Investment Report 2026, released by the United Nations Conference on Trade and Development (UNCTAD) today, showed that FDI inflows into Africa’s most populous nation rose by 148.4 percent in 2025 from $1.61 billion in the previous year.

Last year’s figure was Nigeria’s highest since 2014, when inflows reached $4.69 billion. The West African country last ranked among the continent’s five largest FDI recipients in 2021. In terms of growth rate, Guinea recorded the highest growth of 457.1 percent in 2025.

FDI remains the largest source of external finance for developing economies, accounting for about half of their total external financing in 2025, ahead of remittances, official development assistance, and portfolio flows.

Its development role is distinct through its links to productive capacity, technology transfer,, and participation in global value chains.

Nigeria ranks fourth in Africa

Nigeria ranked fourth among African FDI destinations in 2025, behind EgyptGuinea,ea and Mozambique. In West Africa, the country also got the second biggest inflows.

Egypt retained its position as Africa’s largest recipient of FDI, attracting $15.5 billion. Guinea followed with $7.76 billion, driven by mining investments, while Mozambique received $5.69 billion, supported by hydrocarbons and liquefied natural gas projects.

Nigeria’s return to the top five list reflects a recovery in investor appetite for its energy sector, although inflows remain below the levels required to finance infrastructure, industrialisation and job creation at the scale needed for Africa’s third-largest economy.

UNCTAD said FDI inflows rose across several West African economies, largely because of investment in natural resources and energy.

“FDI inflows rose in several West African economies, supported mainly by investment in natural resources and energy,” the report said.

Guinea’s inflows increased more than fivefold to about $8 billion, driven by bauxite and iron ore projects that are strengthening the country’s role in global mineral supply chains.

Oil, gas and major corporate deals drive rebound

UNCTAD said Nigeria attracted $4.01 billion in FDI in 2025, supported mainly by oil and gas-related international project finance deals, including a major project valued at about $2 billion.

The report also highlighted major transactions involving the country’s oil and industrial sectors, including Shell’s sale of its onshore oil assets to Renaissance Africa Energy, a Nigerian-led consortium, and Huaxin Cement’s acquisition of Lafarge Africa.

The inflows underline the continued importance of extractive industries in attracting foreign capital into Nigeria, even as policymakers seek to draw more investment into manufacturing, technology, infrastructure, agriculture and export-oriented industries.

Nigeria also attracted large projects in hydrocarbons, refining, battery storage and industrial production, alongside Algeria, Namibia, South Africa and Ethiopia, according to UNCTAD.

FDI outflows from the nation fell to $1.19 billion in 2025, the lowest level since 2023, highlighting fewer outward investments by Nigerian companies during the year.

Reforms target $1 trillion economy by 2030

The rebound comes as the Federal Government intensifies efforts to attract foreign capital as part of its plan to build a $1 trillion economy by 2030.

Nigeria will need substantially higher and more consistent foreign investment inflows to meet that target. The country’s growth strategy depends on mobilising capital for power, transport, housing, digital infrastructure, oil and gas, mining, manufacturing and agriculture, while also expanding exports and improving productivity.

Since 2023, the government has introduced a series of reforms aimed at rebuilding investor confidence, including foreign exchange market changes, efforts to improve fiscal stability, tax reforms, energy-sector incentives and measures to ease business constraints.

UNCTAD said Nigeria introduced performance-based tax credits for companies in the upstream petroleum industry, linking fiscal benefits to cost efficiency. The report said the country had also adopted a more selective approach to investment incentives and special economic zones.

It introduced a minimum effective tax rate of 15 percent for multinational enterprises with revenues above €750 million, in line with global tax reforms. Alongside Cameroon, Nigeria has also moved away from broad tax exemptions towards tiered tax credits tied to job creation, local value addition and investment in priority sectors.

The policy shift is intended to ensure that investment incentives deliver measurable economic benefits rather than simply reducing tax obligations for multinational companies.

However, sustaining the recovery will depend on whether reforms translate into a more predictable investment climate. Investors continue to cite foreign exchange volatility, high operating costs, weak infrastructure, insecurity, policy uncertainty and regulatory bottlenecks as key constraints.

Africa’s FDI remains historically strong

Across Africa, FDI inflows declined to $70 billion last year from an exceptional $94 billion in 2024. However, the 2025 figure remained historically strong, standing about one-third above the average recorded between 2010 and 2024.

UNCTAD said the 2024 total was inflated by a small number of unusually large transactions, especially Egypt’s Ras El-Hekma construction and real estate megaproject.

Despite the year-on-year decline, the continet’s’s 2025 FDI inflows were the third-highest recorded in 25 years. Excluding exceptional peaks linked to large one-off transactions in South Africa in 2021 and Egypt in 2024, the report said 2025 represented Africa’s strongest underlying FDI performance in recent decades.

North African inflows fell 56 percent to $22 billion in 2025, largely because of the high base created by Egypt’s Ras El-Hekma project in the previous year. Egypt nevertheless remained Africa’s largest FDI recipient, while Morocco attracted about $3.3 billion, supported by investment in manufacturing and automotive production.

In East Africa, Ethiopia maintained inflows of about $4 billion and recorded a significant increase in announced greenfield projects. Uganda attracted $3.4 billion, supported by investment in oil refining and battery storage.

Mozambique’s inflows rose strongly, driven by hydrocarbons and liquefied natural gas projects, while Angola returned to positive inflows of about $1.1 billion after recording negative flows in 2024.

But South Africa recorded negative FDI inflows of about $2.3 billion, largely because of intracompany financial flows, profit repatriation and merger-and-acquisition transactions. The country, however, remained an important destination for announced projects in manufacturing, energy and services.

Global FDI outflows remained concentrated among a small group of economies in 2025. The United States remained the largest source of outward investment, followed by Japan and China, while Asian and Gulf-based investors continued to expand their role in global capital flows.