Nigeria’s Economic Outlook Amid Tough Reforms, Exiting Foreign Companies and New Investments
Despite recent economic challenges, Nigeria is showing signs of recovery and renewed investor interest, thanks to bold reforms and strategic global partnerships.
In 2024, multinational giants like Guinness-owner Diageo, GSK, and Unilever either exited or scaled down operations in Nigeria, citing inflation, currency instability, and high borrowing costs. These pressures followed President Bola Tinubu’s ambitious reforms, including the removal of the naira’s exchange rate peg. While this led to a sharp devaluation, it also unified the forex market and cleared a backlog of foreign exchange obligations.
The reforms temporarily hurt investor confidence and foreign direct investment (FDI) fell by 42.3% in 2023. However, foreign portfolio investment surged by 106.5%, reflecting rising global interest in Nigeria’s capital markets.
Experts say the tide is turning. “The economy is gradually getting better,” said Tajudeen Ibrahim of Chapel Hill Denham, pointing to early signs of inflation reduction and exchange rate stability. The Central Bank of Nigeria (CBN), now focused on orthodox monetary policies, has won praise from institutions like Fitch Ratings and TLG Capital, which called the current environment “the best time to enter Nigeria in 15 years.”
Meanwhile, local and emerging-market investors are stepping up. Companies from Singapore, China, Brazil, and Italy are filling gaps left by exiting multinationals:
• Tolaram Group of Singapore acquired Diageo’s stake in Guinness Nigeria and is expanding its investments in the Lekki Free Zone.
• Guala Closures of Italy opened a plant in Lagos to serve West Africa’s growing beverage market.
• Huaxin Cement of China is acquiring Lafarge Africa in a $1bn deal.
• Brazilian meat giant JBS is investing $2.5bn in Nigeria’s livestock sector.
In oil and gas, indigenous companies like Seplat, Oando, and Renaissance Energy have acquired assets from international majors, signalling confidence in the long-term prospects of Nigeria’s energy sector.
Nigeria’s large, youthful population and its strategic market potential continue to attract interest. “There are enormous opportunities in agriculture, food processing, and infrastructure,” said Ibrahim.
At a recent investment forum in New York, the CBN and Nigeria Exchange (NGX) Group pitched the country’s reformed economic landscape to global investors. These efforts are bearing fruit: Nigeria’s foreign exchange market is now more transparent, correspondent banking confidence has improved, and investor sentiment is on the rise.
Still, challenges remain. Power supply is weak, infrastructure gaps persist, and oil prices are volatile. But analysts say Nigeria is better positioned to navigate these headwinds, especially with its renewed focus on fiscal discipline, improved monetary policies, and a return of global investor confidence.
As Verod Capital CEO Danladi Verheijen put it, “They’ll come back. They’ll buy the same companies they sold, only at 10 times the price.”
Nigeria’s economy, while facing global and domestic hurdles, is on a reform-driven path to recovery. With resilient local players and growing international interest from emerging markets, the country is poised for a long-term economic comeback.