Would a U.S.–Nigeria Investment Treaty Unlock the Next Wave of Capital?

Nigeria’s investment story is at an inflection point. In 2024 alone, the country attracted roughly $17 billion in foreign direct investment into oil and gas following long-awaited reforms under the Petroleum Industry Act. Renewable energy commitments are rising, fintech continues to dominate African venture capital flows, and Nigeria remains the United States’ largest trading partner in sub-Saharan Africa.

Yet one puzzle remains: Nigeria has no bilateral investment treaty (BIT) with the United States—a country that supplies some of its most sophisticated energy, technology, and institutional capital. As Nigeria reviews its BIT portfolio—31 signed, only 15 in force—the timing is right to ask whether a Nigeria–U.S. BIT would offer protections meaningfully stronger than Nigeria’s domestic investment regime, and whether it would catalyze more U.S. capital into oil, renewables, and fintech.

The Benchmark: U.S. Model BIT Protections
The 2012 U.S. Model BIT sets a high bar for investor protection. It guarantees national treatment and most-favoured-nation status, ensuring U.S. investors receive treatment no worse than domestic or third-country investors. It tightly constrains expropriation—direct or indirect—requiring “prompt, adequate, and effective” compensation, a higher and more precise standard than many domestic laws provide.

Equally important are operational protections. Investors are guaranteed free transfer of capital, dividends, interest, and loan repayments in convertible currency. Performance requirements—such as forced local sourcing or technology transfer—are prohibited. Investors may hire senior management regardless of nationality. And crucially, the treaty offers advance consent to investor-state dispute settlement (ISDS), allowing claims to be brought directly to ICSID or UNCITRAL tribunals, bypassing domestic courts altogether.
These protections are designed not just to attract capital, but to reduce political, regulatory, and enforcement risk for long-term investments.

Nigeria’s Domestic Framework: Open, But Incomplete
Nigeria’s investment regime is comparatively liberal on paper. The Nigerian Investment Promotion Commission (NIPC) Act permits up to 100% foreign ownership outside restricted sectors and allows repatriation of profits and capital. The 2023 Arbitration and Mediation Act modernized dispute resolution, aligning Nigeria with UNCITRAL standards and improving enforceability of arbitral awards. Regionally, the ECOWAS Common Investment Code sets baseline investment protections across West Africa.
The challenge is not openness—it is certainty and enforcement. Expropriation protection under the NIPC Act relies on a less precise “fair and adequate” compensation standard. Access to international arbitration exists, but not through automatic treaty consent. Foreign-exchange controls, administrative delays, and regulatory reversals continue to undermine confidence. And many of Nigeria’s existing BITs remain undomesticated, limiting their practical value in local courts.

Where a U.S.–Nigeria BIT Would Add Real Value
A bilateral treaty with the United States would close five critical gaps.
First, dispute resolution. Treaty-based ISDS gives investors a neutral, enforceable forum without reliance on domestic courts. Second, treatment standards. Explicit fair and equitable treatment obligations reduce uncertainty around regulatory delays, permit denials, and abrupt policy shifts. Third, expropriation clarity. Detailed annexes on indirect expropriation narrow disputes over valuation and regulatory takings.

Fourth, capital mobility. Treaty guarantees matter in a country where foreign-exchange bottlenecks remain a persistent concern.
Fifth, performance requirements. U.S. investors are particularly sensitive to forced localization mandates that raise costs and dilute operational control.

These protections do not eliminate Nigeria’s structural challenges—power shortages, corruption risks, infrastructure gaps—but they materially reduce legal and political risk premiums.

Sectoral Impact: Energy and Fintech
The case for a BIT is strongest where U.S. capital already concentrates. Nigeria approved over $13.5 billion in upstream oil and gas investments in 2024, led by U.S. majors responding to clearer fiscal rules. Renewable energy commitments exceeded $400 million as Nigeria pursues its 2060 net-zero ambitions. In fintech, Nigeria captured nearly half of Africa’s deals in 2024, with U.S. investors supplying the majority of venture funding.
In these sectors, exit certainty, dispute predictability, and capital mobility are decisive. Treaty protections directly address those concerns.

A Modern Treaty, Not a Blank Cheque
A Nigeria–U.S. BIT should be carefully calibrated. Strong core protections can coexist with carve-outs for public health, environmental protection, financial stability, and national security. ISDS can include transparency, cooling-off periods, and early dismissal of frivolous claims. ESG and anti-corruption provisions would align with U.S. institutional investor mandates while reinforcing Nigeria’s policy goals.

Nigeria’s domestic investment laws signal openness, but they do not yet provide the clarity and enforceability that large-scale U.S. capital demands. A modern U.S.–Nigeria BIT would offer stronger protections than existing statutes and regional frameworks, anchoring investor confidence in energy and technology at a critical moment. With Nigeria already reviewing its treaty framework, the opportunity is clear: negotiate smartly, protect regulatory space, and build a legal foundation capable of converting policy ambition into sustained foreign investment and economic diversification.

Blessing C. Jones