Nigeria sees Africa’s biggest jump in investment attractiveness ranking

…nears continent top 10 spots

Nigeria climbed seven places to 11th in Africa’s investment attractiveness rankings for 2026/27, the continent’s biggest upward movement in the latest edition, as economic reforms begin to improve investor perceptions of the country, according to Rand Merchant Bank (RMB).

The West African country recovered from 18th position in the 2025/26 edition, when it fell nine places amid the economic pressures triggered by fuel subsidy removal, foreign exchange liberalisation and other macroeconomic adjustments.

The African corporate and investment firm said the rebound reflects growing confidence that the reforms are laying the groundwork for more sustainable economic growth, although Nigeria remains outside the continent’s top 10 investment destinations.

“Investors may disagree on the pace of the recovery, but there is increasing clarity regarding the direction of travel,” it said in its Where to Invest in Africa 2026/27 report released on Tuesday.

The report attributed Nigeria’s improved ranking to reforms aimed at correcting economic imbalances, including the removal of the petrol subsidy, foreign exchange market liberalisation and broader macroeconomic adjustments.

“Nigeria’s improved position in the current overall rankings reflects the view that these reforms, despite their immediate costs, are resetting the economy onto a more sustainable course,” the report said.

It added that foreign exchange unification had improved price discovery and helped attract capital that had previously been deterred or trapped, while subsidy removal had freed up fiscal space. The rebasing of national accounts and inflation statistics, it said, had also given policymakers better tools to assess structural weaknesses and allocate resources.

“The adjustment has been painful, but the direction of travel is increasingly legible,” RMB said, adding that effective policy decisions and implementation ultimately drive investment and economic growth.

Nigeria’s rebound follows Côte d’Ivoire’s rise in the previous edition. The West African economy recorded the largest upward movement in the 2025/26 rankings, climbing eight places from 16th to eighth, before advancing another place to seventh in the latest edition.

RMB attributed Côte d’Ivoire’s continued rise to strong economic growth, disciplined implementation of reforms, infrastructure development and expanding hydrocarbon production.

Capital inflows rise, but long-term investment remains limited

Nigeria’s improved ranking comes amid a sharp increase in foreign capital inflows, although the composition of those investments raises questions about the durability of the recovery.

Capital inflows reached an estimated $23.2 billion in 2025, nearly double the $12.3 billion recorded in 2024, according to RMB. The report attributed the increase to a steadier naira, easing inflation and double-digit yields that restored the country’s appeal to investors seeking returns from financial assets.

Portfolio investment accounted for 85 percent of the total, equivalent to $19.74 billion, while foreign direct investment (FDI) contributed just 4 percent, or $923 million.

Although FDI increased from $675 million in 2024, it remained a small share of total inflows, highlighting the gap between attracting investors into financial assets and securing long-term capital for productive activities.

Capital inflows rose further to $10.4 billion in the first quarter of 2026, with portfolio investment continuing to account for a substantial share, the report said.

The figures show that improving confidence in Nigeria’s financial markets has yet to translate into a comparable expansion in direct investment in businesses and productive assets.

For policymakers, the challenge is to sustain macroeconomic stability while creating conditions that encourage investors to commit capital over longer periods.

Reforms underpin Nigeria’s recovery

RMB traced much of Nigeria’s economic adjustment to the removal of the petrol subsidy in May 2023 and the unification of foreign exchange windows the following month.

The reforms initially triggered substantial economic pressures, including sharp currency depreciation and higher consumer prices. Inflation rose to a peak of 34.8 percent year-on-year before easing to 15.2 percent by the end of 2025, according to figures cited in the report.

Nigeria’s real gross domestic product grew by 3.9 percent in 2025, compared with 3.4 percent in 2024, supported by stronger oil production and a resilient services sector.

The Central Bank of Nigeria projected growth of about 4.5 percent in 2026, underpinned by continued reform gains, rising external reserves and a gradual easing of inflation.

However, RMB cautioned that the improvement in headline inflation did not necessarily mean household pressures had disappeared. Food inflation fell to 8.9 percent in January 2026 before rising to 14.3 percent in March, highlighting the fragility of the disinflation trend.

The report also noted that Nigeria’s GDP rebasing raised the estimated size of the economy in 2024 from about $188 billion to approximately $243 billion, reflecting the adoption of a new base year and the inclusion of previously underrepresented economic activities.

Morocco overtakes South Africa

Beyond Nigeria’s recovery, the rankings highlight a shifting investment landscape across Africa, with Morocco overtaking South Africa to become the continent’s fourth-most attractive investment destination.

Morocco advanced one place, while South Africa slipped to fifth, as differences in growth momentum, industrial competitiveness and investment performance reshaped their relative positions.

The Arab nation’s economy grew by 4.9 percent in 2025, compared with 1.1 percent in South Africa, according to RMB. Its automotive manufacturing industry, export diversification, infrastructure investment and ability to attract foreign direct investment have strengthened its appeal.

“The country has emerged as one of Africa’s leading manufacturing hubs, particularly in automotive production, while maintaining macroeconomic stability and attracting substantial foreign direct investment,” the report said.

South Africa, which is the continent’s largest economy, continues to benefit from deep financial markets, improving energy security and reform momentum. However, slower economic growth and persistent structural constraints contributed to its loss of ground.

Seychelles and Mauritius retained first and second positions, respectively, while Egypt remained third.

Resilience shapes investment decisions

The 2026/27 edition also introduces a resilience and vulnerability framework to help investors assess how African economies may perform during periods of economic disruption.

The framework complements the main rankings, which assess 31 countries across 20 metrics. It distinguishes between an economy’s ability to withstand shocks and its exposure to external pressures, including commodity dependence, import reliance and financing needs.

RMB said investment attractiveness is increasingly determined not only by growth prospects but also by “the capacity to withstand adversity”.

The report identified policy consistency, stronger institutions, economic diversification and improved governance as important characteristics of countries positioned to attract a growing share of investment.