Why Nigeria’s Business Environment Remains Risky Despite Reforms — Report

Nigeria’s business environment continues to face significant structural and regulatory challenges despite ongoing reform efforts, according to a new report that warns persistent policy inconsistencies and overlapping regulations are discouraging both domestic and foreign investment.

The report, titled “Baseline Report on Priority Legislative Actions to Foster a Business Enabling Environment,” highlights that while recent reforms have improved administrative processes, they have yet to address deeper systemic issues affecting investor confidence and private sector growth.

Presented by the Nigerian Economic Summit Group (NESG) in collaboration with the Ernest Shonekan Centre and the Policy and Legal Advocacy Centre, with support from the Foreign, Commonwealth & Development Office, the study underscores that Nigeria remains a “high-cost and high-risk” destination for business operations.

According to the findings, economic growth has stabilised at between three and four per cent in recent years, driven largely by non-oil sectors. However, this modest recovery masks enduring structural weaknesses that continue to constrain expansion in the private sector.

The report identifies overlapping regulations, frequent policy changes, and weak coordination among government agencies as key impediments to a conducive business climate.

These challenges, it notes, increase compliance costs and create uncertainty for investors, ultimately limiting long-term capital inflows.

“Complex and overlapping regulations, frequent policy shifts, weak coordination across agencies, and uneven subnational implementation raise compliance costs and create uncertainties for investors,” the report stated.

It further highlights persistent bottlenecks such as unreliable electricity supply, inadequate transport and logistics infrastructure, limited access to affordable financing, foreign exchange constraints, and elevated inflation.

In addition, insecurity, skills shortages, and regulatory unpredictability continue to complicate business operations across sectors.

While initiatives such as the Presidential Enabling Business Environment Council (PEBEC) and the Business Facilitation Act have improved business registration processes and administrative efficiency, the report notes that critical gaps remain unresolved.

These include inconsistencies in regulatory frameworks, weak contract enforcement, prolonged dispute resolution processes, and poor policy predictability.

Speaking at the presentation, Nnanna Ude, a board member of the Ernest Shonekan Centre, said Nigeria’s economic progress remains fragile due to these structural constraints.

He noted that “public debt remains elevated, and structural constraints such as infrastructure gaps, regulatory inefficiencies, policy inconsistencies, and institutional challenges continue to limit private sector growth and investment.”

Ude emphasised that macroeconomic reforms alone are insufficient to drive sustainable economic transformation without corresponding improvements in legislative and regulatory systems.

“Macroeconomic reforms alone are not sufficient without strong, coherent, and effective legislative and regulatory frameworks,” he added.

The report also points to deficiencies within Nigeria’s legal and regulatory architecture, including conflicting provisions across laws, overlapping mandates among regulatory bodies, weak enforcement capacity, and limited transparency in legislative processes.

Chairman of the Ernest Shonekan Centre, Kyari Bukar said the review spans critical sectors such as governance, the digital economy, trade, infrastructure, energy, climate policy, and the financial system.

He stressed that addressing legal and regulatory gaps across these areas is essential to improving the overall investment climate.

The report recommends targeted legislative reforms aimed at strengthening regulatory coordination, enhancing policy consistency, and improving implementation across all levels of government.

Without such measures, it warns, Nigeria risks continued underperformance in attracting long-term investment and achieving sustained economic growth.

Overall, the findings reinforce the view that while reform initiatives have yielded incremental gains, deeper institutional and policy alignment is required to transform Nigeria into a more predictable and competitive business destination.