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Since the return to democracy in 1999, Nigeria embarked upon an ambitious reform programme towards greater economic openness and liberalisation. As a result, gross domestic product (GDP) growth picked up consistently, never going below 5% since 2003. Nigeria has become a top recipient of foreign direct investment (FDI) in Africa, with inflows having surpassed those to South Africa since 2009. The federal government’s Transformation Agenda recognises private sector development as the main engine for economic growth and includes bold investment reforms. Growth has however not yet been translated into inclusive development and the investment climate still suffers from severe challenges.

This chapter examines the policy framework for investment in Lagos State. The chapter analyses its various facets in which Lagos State Government has the largest policy space in terms of encouraging investment at state level to support economic growth and sustainable development. These areas include: the resolution of business disputes, where Lagos has proved to be a forerunner in promoting innovative and alternative dispute resolution means; access to land for investors in Lagos State; the institutional framework governing investment promotion in Lagos State, with a particular focus on the newly created Investment Promotion Unit; measures to enhance the business environment, facilitate investment and improve consultations with the private sector; free trade zones development and investment incentives; business linkages and measures to support SMEs operating in Lagos State; and the policy framework for private sector participation in the development of state infrastructure with a focus on clean energy and public-private partnerships.

This chapter provides an overview of Nigeria’s legal framework for investment. It examines the quality of the country’s investment policies and the level of legal protection granted to both domestic and international investors. It covers the admission, regulation and protection of foreign direct investment and ascertains whether the principle of non-discrimination features in investment-related laws. It also looks into the rules for expropriation, the framework for protecting intellectual property rights and the legal regime for land property rights. The adjudication of commercial and investment disputes, including through arbitration, is another building block of the investment policy framework at both federal and state levels. The chapter also analyses Nigeria’s investment treaty practice and provides options for a strengthened and well-balanced treaty policy.

Export competitiveness is generally a challenge for Nigeria – in particular as concerns finding niches for exports in which the country can gain in value-added and diversify exports away from the current focus on raw materials. This chapter investigates to what extent Nigeria’s policy and institutional framework for trade (including the draft National Trade Policy of 2013, still awaiting finalisation as of spring 2015) can help address these challenges. This indicates that due to the wide breadth of “targeted” sectors, it is difficult to dedicate sufficient resources and to address supply-side constraints specific to each sector. Moreover various policy questions relevant to trade are not under the ambit of the FMITI, but are rather dealt with by the agriculture or finance ministries, which complicates effective reform implementation. The chapter provides recommendations on how to improve the focus of the draft Policy, better address remaining non-tariff barriers to trade, and enhance institutional co-ordination among bodies responsible for trade and investment policy formulation.

The OECD Investment Policy Review of Nigeria presents an assessment of the investment climate of Nigeria, including the regulatory and institutional framework for investment. It uses the Policy Framework for Investment to discuss the challenges and opportunities faced by the country in its reform efforts. Covering a wide range of policy areas at Federal level, the report also includes a special chapter on Lagos State focusing on policy options that can be specifically applied at State level. Undertaken within the framework of the NEPAD-OECD Africa Investment Initiative, the Review reflects the growing interest of Nigeria in integrating into the global economy.

This chapter addresses Nigeria’s policy challenges as concerns the impact on foreign and domestic investment of: infrastructure investment; competition policy; corporate governance; and financial sector development. It investigates ongoing efforts to: increase private participation in infrastructure networks, notably energy; enact a competition law as well as a code of corporate governance for Nigeria; and address critical challenges of access to finance in the country, which poses a particular barrier to SMEs seeking to tap into investment linkage opportunities. The chapter makes recommendations regarding how to secure effective implementation of these reforms, and to level the playing field for private investment in various sectors of the economy. In infrastructure markets this will notably require greater institutional co-ordination among the various agencies charged with: price-setting for basic utilities; public procurement; monitoring the governance of state-owned enterprises; and ensuring competitiveness.

This overview chapter provides a background analysis of the Nigerian economy, the role of private investment in its development and the recent FDI trends. It shows how the country became the preferred destination for foreign direct investment in Africa while also still facing a number of challenges affecting the investment climate. The chapter also summarises the key OECD policy recommendations made at both federal and Lagos State levels that are developed in other chapters of the report.

Investment promotion and facilitation measures, including incentives, can be effective instruments to attract investment, provided they aim at correcting market failures and are developed in a way that can leverage the strong points of a country’s investment environment. This chapter provides an analysis of the framework for investment promotion and facilitation in Nigeria. It examines existing strategies and institutions governing investment promotion and facilitation with a particular focus on the Nigerian Investment Promotion Commission. It highlights important measures that have been taken by the government to improve the business environment and attract foreign investment in various sectors of the economy. It also provides recommendations on the investment incentives regime as well as on actions to encourage business linkages and other policies to boost foreign investments’ spillovers on domestic small and medium-sized enterprises.