UN Warns Nigeria’s Investment Drive Faces Rising Global Challenges

The United Nations Conference on Trade and Development (UNCTAD) has warned that rising global uncertainty, trade disputes and geopolitical tensions could make it harder for Nigeria and other developing countries to attract the foreign investments they rely on to grow their economies.

UNCTAD, in its 2026 World Investment Report, International Investment in a Turbulent Era, said foreign direct investment (FDI) was still the largest source of external financing for developing economies in 2025, accounting for about half of total external funding – more than remittances, official development assistance and portfolio investments.

The report pointed out that FDI is especially important because it does more than bring in money. It helps countries develop industries, create jobs, transfer technology and link local businesses to global supply chains.

UNCTAD, however, warned that the outlook for attracting such investment this year remained bleak.

The report notes that the prospects for FDI in 2026 are “highly uncertain”, with slower global economic growth, trade policy uncertainty, geopolitical tensions and armed conflicts continuing to deter investors from committing fresh capital.

The organisation said many multinational companies are likely to delay, suspend or even cancel planned investments until the global business environment stabilises.

“Strong balance sheets of leading firms may support investment in high-value industries but risk further concentrating FDI in a narrow set of sectors and locations,” the report said.

The warning comes as Nigeria seeks more foreign investment to drive industrialisation, create jobs, boost exports and ease pressure on public finances.

According to UNCTAD, the report underscores the need for Nigeria and other developing countries to improve their investment climate by enhancing infrastructure, ensuring consistency in policy and creating conditions that will attract long-term productive investments.

The report also found that the distribution of global investment remains uneven.

Despite a 21 per cent increase in foreign investment into the world’s least developed countries in 2025, most of the rise was concentrated in a handful of resource-rich countries, with many poorer economies continuing to struggle to attract investors.

Small island developing states also experienced relatively low levels of investment inflows, with the majority of projects in the areas of tourism, renewable energy and logistics.

Many structurally weak economies continue to receive limited investment due to small domestic markets, higher business risks and weak participation in fast-growing sectors of the global economy, according to UNCTAD.

The report showed that for Africa, FDI inflows increased by 2 per cent to $70 billion in 2025. While this fell short of the extraordinary $94 billion in 2024, when a handful of mega deals inflated investment numbers, it still marked the continent’s third-best performance since 1990.

UNCTAD noted that the value of new greenfield investment projects across Africa dropped by nearly one-third, but the number of announced projects grew, suggesting investors are opting for more smaller-scale projects rather than a few large investments.

The investments were mostly focused on energy infrastructure, mining, renewable energy and critical minerals, sectors that remain of great interest globally due to the energy transition.

UNCTAD summed up its findings by saying “the findings reinforce the urgency for developing economies to strengthen domestic investment frameworks, diversify their productive base and improve competitiveness in order to attract more resilient and sustainable foreign investment in an increasingly volatile global economy”.