Five mistakes investors should avoid when investing in Nigeria

Nigeria remains one of Africa’s biggest investment opportunities, but investing in the country successfully requires more than simply bringing capital into the market.

For foreign investors, understanding the local operating environment, building partnerships with domestic institutions and taking a sufficiently long-term view can make the difference between an investment that merely enters the market and one that creates lasting economic value.

Nairametrics Research has independently tracked investment activity in Nigeria, providing a broader view of investment interest beyond conventional capital-importation data.

To better understand what determines whether investment translates into lasting economic value, we spoke with a global development finance institution with more than two decades of experience investing in the country.

The distinction matters because Nigeria’s investment story is often measured by how much capital is announced or imported, rather than by how effectively that capital expands domestic productive capacity, mobilises local financing or generates value within the economy.

In an interview with Nairametrics, Saeed Ibrahim, Director, Sustainable Impact at the Private Infrastructure Development Group (PIDG), shared insights on the key mistakes investors should avoid when investing in Nigeria.

Ibrahim’s perspective is informed by PIDG’s experience in Nigeria and its broader work across African infrastructure markets.

Here are the five major mistakes he believes investors should avoid when investing in Nigeria.

1. Taking a short-term view of the Nigerian market

One of the biggest mistakes an investor can make in Nigeria is approaching the market with a short-term mindset.

Nigeria’s economic size, demographic potential, and infrastructure create significant opportunities. However, these opportunities rarely materialize overnight. Investors focused solely on short-term returns often struggle during periods of economic adjustment, currency volatility, or policy reforms.

Ibrahim said investors seeking quick returns may find the Nigerian environment particularly challenging because the country’s investment opportunities often require time, patience and willingness to work through periods of uncertainty.

• “I think investors that take a short-term view, would be, I don’t want to call it a mistake, but it’s something that I think would be challenging to most investors,” he said.
• “I think that long-term transformative impact in Nigeria, and I think also, you know, long-term returns and partnership, we’ve seen the value of that by taking that long-term approach to investing in the country,” Ibrahim said.

He pointed to PIDG’s support for Indorama as an example of how patient capital can drive industrial growth over several years. Rather than approaching the company as a single transaction, PIDG’s Emerging Africa and Asia Infrastructure Fund (EAIF) supported the business at different stages of its growth.

2. Ignoring domestic investors and local capital

Many foreign investors enter Nigeria believing they can operate independently of local financial institutions and domestic investors. Ibrahim argues that this approach leaves significant value on the table.

Nigeria’s pension funds, institutional investors, and local financial ecosystem offer deep pools of capital and market knowledge that foreign investors often underestimate.

According to him, investors who fail to partner with local capital providers miss an important competitive advantage.

• “If, as a foreign investor, you’re only coming with that foreign lens, I think you can end up missing huge benefits to partnering with domestic capital providers,” he said.

He noted that domestic investors possess a deeper understanding of local economic realities while also avoiding many of the currency-related risks faced by foreign capital.

PIDG’s experience through InfraCredit Nigeria reinforces this point. Since its establishment with the Nigerian Sovereign Investment Authority (NSIA), InfraCredit has helped mobilize more than N300 billion in domestic investment into infrastructure projects, demonstrating that local institutional capital can play a major role in financing long-term development, according to Ibrahim.

3. Assuming capital alone is enough

Capital can finance an investment, but capital by itself does not necessarily make an investment successful.

In Nigeria’s complex operating environment, investment capital often needs to be accompanied by broader market-development efforts.

• “Capital alone is often not enough. It needs to be accompanied by technical expertise and some market building support,” he said.

His point is particularly relevant in sectors where businesses must navigate complex regulatory requirements, develop new capabilities, or build markets that are still relatively young. Technical assistance, issuer advisory services, investor education, and engagement with regulators all played critical roles in strengthening the infrastructure finance ecosystem.

According to Ibrahim, these additional interventions were critical to the results achieved in Nigeria’s infrastructure finance market.

For investors, the lesson is clear: successful market entry often requires much more than writing a cheque.

4. Waiting for the “perfect” investment environment

Nigeria has experienced periods of significant currency depreciation, high interest rates, power shortages, regulatory constraints and broader macroeconomic uncertainty.

For some investors, these challenges can become reasons to delay investment or exit the market altogether.

But Ibrahim believes waiting for a completely risk-free environment can itself become an investment mistake.

His advice is for investors to understand the constraints and structure their investments around them.

• “As investors, we should work within Nigeria’s constraints rather than waiting for the perfect investment environment,” he said.

The argument is not that investors should ignore risk. Rather, successful investors need to recognize the risks from the outset and select financial structures capable of absorbing them.

Ibrahim pointed to guarantees, local currency financing and patient, long-term debt as examples of instruments that can help investors navigate difficult market conditions.

For foreign investors, the message is that Nigeria should not be assessed solely on whether the current environment is easy or difficult.

Instead, the more important question may be whether the investment structure, business model, and local partnerships are sufficiently robust to operate through changing conditions.

5. Failing to build strong local institutions and teams

The fifth mistake is failing to build strong local institutions and locally embedded teams, which Ibrahim identified as critical to achieving lasting impact.

Ibrahim stressed that lasting impact cannot be achieved solely through foreign capital. Success requires local ownership, local knowledge, and institutions capable of sustaining development long after initial investments have been deployed.

• “Strong local institutions and locally embedded teams are critical to achieving lasting impact,” he said.

Over time, this can create a multiplier effect in which an investment does more than finance a single business or project; it helps strengthen the ecosystem around it.

Nairametrics Research tracked investment signals

Nairametrics Research’s internal tracking recorded approximately $353.33 billion in announced, pledged, in-progress and completed investment activity targeting Nigeria in 2025.

The figure should not be interpreted as actual capital imported into Nigeria. Investment signals capture announced, pledged, in-progress and completed investment activity and are intended to measure investor interest and potential capital deployment.

Nairametrics tracks investment signals in collaboration with the Nigerian Investment Promotion Commission (NIPC) to provide a broader view of investment activity beyond conventional capital-importation data.

Why this matters

Nigeria’s investment challenge is not only about attracting foreign capital, but also about ensuring that the capital that enters the country contributes to long-term economic value.

PIDG’s experience suggests that the quality and structure of investment can matter as much as the volume. Short-term foreign capital, poorly integrated with local institutions, or disconnected from domestic financing can be more vulnerable to currency shocks and may deliver limited spillover benefits to the wider economy.

By contrast, investments structured around patient capital, domestic institutional investors, local expertise, and market development can have a broader impact.

This is particularly relevant as Nigeria seeks to close a large infrastructure financing gap, deepen its capital markets and reduce dependence on the export of raw commodities. For investors, the implication is that success in Nigeria may depend less on avoiding every risk and more on building structures, partnerships and financing models capable of operating through those risks.

The broader lesson is that attracting investment is only the first step. The bigger economic gain comes when that investment helps build local institutions, mobilise domestic capital, expand productive capacity and move the economy further up the value chain.

What you should know

The Private Infrastructure Development Group (PIDG) is a development finance organisation focused on using infrastructure investment to drive economic development in emerging markets. PIDG is funded by six governments: the United Kingdom, the Netherlands, Switzerland, Australia, Sweden and Canada.

• PIDG has supported 286 projects since 2002, mobilizing billions of dollars in private capital. Nigeria has remained a priority market for the group, with investments spanning infrastructure finance, manufacturing and industrial development.
• The investor has been investing in Nigeria since 2004, giving it over two decades of investment experience in the country as of 2026. Nigeria is described by PIDG as a priority market. PIDG’s Nigerian activities discussed in the interview cut across infrastructure finance, manufacturing, industrial development, petrochemicals, fertiliser and agro-processing.

PIDG has also invested in manufacturing and industrial capacity in Nigeria. A major example discussed is Indorama, where PIDG, through the Emerging Africa & Asia Infrastructure Fund (EAIF), provided flexible, long-term financing across successive stages of the company’s expansion. This supported the development of Nigeria’s domestic petrochemical and fertiliser industry.