Since democracy was restored in 1999, Nigeria has engaged in ambitious reforms towards greater market liberalisation and economic openness. By far the most populous country of the continent–with more than 170 million people Nigeria is home to 18% of Africa’s population–it now claims to be the largest
economy in Africa, with an estimated nominal GDP of US$510 billion. Its GDP growth has never been below 5% since 2003, and since 2009, it has become the preferred destination for foreign direct investment (FDI) in Africa, ahead of South Africa.
Despite this steady growth, the country still records poor business and investment climate: according to the World Bank Doing Business ranking, Nigeria ranks 170th out of 189 countries, significantly lower than South Africa (43rd), Ghana (70th), Botswana (74th) and Kenya (136th).
The OECD Investment Policy Reviews: Nigeria 2015 attempts to assess the quality of Nigeria’s investment policies through the OECD Policy Framework for Investment (PFI)–a tool to improve investment conditions. It analyses the legal protection granted to domestic and international investors, as well as the legal regime for land property rights and the rules of expropriation: to reassure investors, the government should consider strengthening current land ownership rights. Although the 1999 Constitution states that all citizens have the right to acquire and own immovable property, the main law governing access to land is the 1978 Land Use Act, which nationalised all land in Nigeria. Customary law can get around this, but more reliable reform would help. The report provides policy recommendations on several fronts, such as trade, infrastructure investment and competition.
For the first time, the PFI is being applied at a subnational level: a special chapter
of the review looks into the investment framework in Lagos State, Nigeria’s economic powerhouse, contributing to about one-sixth of its GDP. The state has taken a leading role in promoting innovative dispute resolution means and in developing legislation and experience in clean energy and public-private partnerships.
OECD (2015), OECD Investment Policy Reviews: Nigeria 2015, OECD Publishing, http://dx.doi.org/ 10.1787/9789264208407-en.