Nzekwe: To Foster Investor Confidence, Nigeria Must Ensure Policy Stability and Market-driven Reforms

In this Interview the Founder and Managing Partner of Lex Consulting Group, Collins Nzekwe, provides an in-depth analysis of Nigeria’s investment climate. He explores the factors influencing foreign direct investment, the potential of underutilised sectors, and the impact of policy uncertainty on business confidence. He also shares insights on how Nigeria can harness Diaspora funds for long-term development, navigate macroeconomic challenges, and maximize opportunities presented by AfCFTA, Nume Ekeghe presents the excerpts:

Nigeria has seen fluctuations in FDI inflows over the years. What factors do you believe are currently driving or hindering foreign investment in the country?

Nigeria’s FDI inflows have been volatile, reaching a high of $8.4 billion in 2011 but declining to $2.2 billion in 2022. This volatility reflects the interplay of several factors. Investors are attracted to Nigeria’s large market of over 200 million people, a burgeoning digital economy with 82 per cent internet penetration, and a vibrant entrepreneurial spirit. However, concerns remain. Regulatory unpredictability, particularly in sectors like finance and energy, makes long-term planning difficult. Forex liquidity issues hinder profit repatriation, as seen with the $743 million trapped funds in 2022. Security challenges, including kidnappings and piracy in the Gulf of Guinea, also contribute to investor hesitancy. Creating a more stable and predictable business environment is crucial to attracting and retaining FDI.

Many investors cite regulatory uncertainty and governance concerns as key challenges in Nigeria. What specific policy reforms could make the investment climate more attractive?

To foster investor confidence, Nigeria needs to focus on three key areas. A clear, market-driven exchange rate system is essential. The current multiple exchange rate regime creates uncertainty and discourages investment.  Policy flip-flops, especially in critical sectors like finance, energy, and tech, need to be minimised. Consistent and predictable policies are crucial for long-term investment planning. Stronger Rule of Law, enhancing contract enforcement, protecting intellectual property rights, and intensifying anti-corruption efforts are vital. Furthermore, addressing infrastructure deficits through effective public-private partnerships (PPPs) is crucial. Investors need reliable power, efficient transport networks, and robust broadband connectivity.

Which sectors in Nigeria are currently attracting the most FDI, and what industries do you believe are under explored but have significant potential?

While traditional sectors like oil & gas, fintech, telecommunications, and manufacturing continue to attract FDI, we see immense untapped potential in other areas. Take agritech, for example. Nigeria has vast arable land and a growing population. There’s a huge opportunity to improve food security and create jobs through agritech solutions. Healthcare is another area with immense potential—Nigeria faces a significant healthcare infrastructure gap, and there’s room for investment in telemedicine, pharmaceuticals, and medical device manufacturing.

Renewable energy is also a promising sector. While attending CoP29 in Baku last year, it was evident that developing nations, including Nigeria, bear the brunt of climate crises but are not receiving adequate funding from international bodies responsible for climate financing. At the same time, governments aren’t doing enough to ensure these funds are allocated where they are most needed. Nigeria has abundant solar and wind resources, and investing in renewable energy generation and distribution can drive sustainable, long-term growth.

And let’s not forget AI. With high mobile penetration and rapid digital adoption, Nigeria is ripe for AI-driven solutions across sectors like education, healthcare, and finance. At the 2025 World Economic Forum, AI was a key agenda item, especially as one of the conveners and strategists at Africa House at WEF, Davos. Throughout the WEF week, a major focus was on strategizing ways to help African-focused AI startups access international funding for AI research and projects. Bridging this gap is crucial to ensuring Africa does not fall behind in the global AI revolution.

Unlocking capital and incentivising investment in these sectors will be key to diversifying Nigeria’s economy and driving long-term sustainable growth.

Remittances have consistently outpaced FDI in Nigeria. How can the government and private sector better harness diaspora funds for long-term economic development?

Nigeria receives substantial remittances, reaching $20.9 billion annually. However, much of it goes towards consumption. To channel these funds into productive investments, we need to explore options like diaspora bonds linked to infrastructure and industrial projects. Creating structured investment platforms that facilitate diaspora investment in SMEs, real estate, and other productive sectors is also crucial. And of course, offering tax incentives to encourage long-term diaspora investments is key. Ultimately, the government needs to ensure a secure and attractive business environment to build trust and attract diaspora capital.

Through ThinkAfrica, you engage with the African diaspora. What are the biggest barriers preventing more structured diaspora investments, and how can they be addressed?

Based on our engagement with the diaspora, three key barriers emerge. Firstly, limited investment channels beyond simply sending money home. People need more accessible and transparent options. Secondly, regulatory and legal uncertainty creates hesitation. Concerns about property rights, contract enforcement, and legal recourse are valid. And finally, there’s a trust deficit. Past experiences with fraud, mismanagement, and lack of transparency have eroded trust. To overcome these barriers, we need to establish diaspora-focused investment funds and platforms with strong governance and transparent operations. We also need to enhance financial literacy programs to educate the diaspora about investment opportunities and risks. Finally, we need to strengthen legal frameworks to protect diaspora-owned assets and ensure a level playing field for diaspora investors.

With currency volatility and inflation posing risks, how should investors and businesses navigate Nigeria’s macroeconomic landscape in the coming years?

Navigating this dynamic environment requires flexibility and adaptability. Businesses should diversify revenue streams, explore currency hedging tools, and consider local currency financing options to mitigate currency risk. Reducing import dependency by prioritizing local sourcing and import substitution is crucial. Streamlining operations, optimizing resource allocation, and adopting technology to manage inflation-driven cost pressures are also essential. Lastly, focusing on long-term investments in infrastructure and other productive sectors that offer long-term value and resilience is key.

The African Continental Free Trade Area (AfCFTA) is expected to boost intra-African trade. How can Nigeria position itself to maximize the benefits of this agreement?

AfCFTA presents a significant opportunity. To capitalize on it, Nigeria needs to become a production hub by investing in competitive manufacturing and value-added industries. Upgrading trade infrastructure, streamlining customs procedures, and investing in regional transport corridors are essential. Strengthening intellectual property rights to encourage innovation is crucial. Finally, forming regional partnerships in sectors like fintech, agribusiness, and the creative industries will leverage regional strengths and create value chains.

Nigeria’s fintech sector has gained international attention. What lessons can traditional industries learn from the agility and innovation driving Nigeria’s startup ecosystem?

Absolutely. The fintech sector has demonstrated remarkable agility and innovation. Traditional industries can learn a lot from this. Firstly, they need to embrace agility, adopt new technologies rapidly, and adapt to changing customer needs. Secondly, leveraging data analytics and customer insights to inform decision-making and personalize offerings is crucial. Finally, fostering collaboration with startups, tech companies, and research institutions is essential to drive innovation and access new markets.

Having worked across banking, consulting, and entrepreneurship, what practical advice would you give to businesses looking to scale successfully in Nigeria’s evolving economic environment?

Scaling successfully in Nigeria requires a long-term perspective. You need a robust strategy that accounts for the complexities and challenges of the Nigerian market. Building strong local partnerships is key to navigate regulatory and operational hurdles. And leveraging technology to optimise operations, enhance customer service, and expand reach is essential. Remember, the Nigerian market is dynamic and ever-changing. Businesses that are adaptable and resilient will be the ones that thrive.