While Nigeria offers U.S. firms export opportunities in many sectors, it can pose daunting challenges including the high cost of doing business, the need to duplicate essential infrastructure, insecurity, corruption, the lack of effective judicial due process, and nontransparent economic decision making in government procurement. Clearance of goods at ports is often slow, cumbersome, and highly bureaucratic. Companies indicate that corruption and congestion remain major issues at ports.
To access many opportunities such as public bidding and participation in sectors with local content requirements, U.S. companies seeking to do business in Nigeria may need to incorporate companies or otherwise establish a presence as local law may require. U.S. firms should seek competent local partners and experienced commercial lawyers.
The continuing influx of Asian, especially Chinese, suppliers and manufacturers into Nigeria constitutes a major competitive challenge to U.S. business in many industry sectors. Some local business leaders voice concerns about the low quality of such products and their high rate of penetration. However, the market continues to be very price sensitive, making cheaper Asian goods more competitive.
Corruption
President Tinubu’s stated priorities at the 2024 convening of the U.S.-Nigeria Bilateral Commission included tackling corruption. For 2023, Transparency International’s Corruptions Perceptions Index ranked Nigeria 145 out of 180 countries. Reasons for this ranking include the prevalence of corruption in Nigeria, weak government institutions, extortion and political interference in judicial systems, and poverty. The Nigerian government has sought to address corruption through the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Extractive Industries Transparency Initiative (EITI). However, cases progressing to conviction are rare.
Foreign Exchange Restrictions
In 2024, Nigeria continued to face challenges with its foreign exchange system, despite recent reforms by the Central Bank of Nigeria (CBN). Notably, in October 2023, the CBN lifted restrictions on 43 previously banned items, including food products, allowing importers to access official foreign exchange markets. This move aimed to stabilize the naira, boost liquidity, and reduce pressure on the parallel market. However, difficulties persist due to high inflation and currency devaluation. Importers still face hurdles in sourcing foreign exchange, and the impact on consumer demand remains uncertain. One of the most daunting challenges for businesses entering the market is the lack of access to foreign exchange, reducing the ability to import necessary inputs and equipment and to service external debt. Foreign exchange is tightly controlled by the CBN and must be requested by companies. Requests are regularly met with a fraction or none of the requested currency, which forces many companies to look for alternative and more expensive sources from the parallel market.
Local Content
Nigeria’s local content requirements are designed to boost domestic participation and capacity. Established under the Nigerian Oil and Gas Industry Content Development Act (2010), these regulations mandate that companies operating in Nigeria prioritize Nigerian labor, materials, and services in their operations. This includes setting minimum thresholds for the employment of Nigerian workers and the procurement of locally manufactured goods. The Raw Materials Processing and Local Production Protection bill, which would require a minimum of 30 percent domestic processing of Nigerian raw material prior to export is working its way through the National Assembly. The goal is to promote technology transfer, increase job creation, and foster economic growth. While the policy has led to increased local involvement, challenges remain, such as the need for further development of local expertise and infrastructure.
Government Procurement
Nigeria is not a signatory to the WTO Agreement on Government Procurement. Foreign companies incorporated in Nigeria receive national treatment in government procurement. Government tenders are published in local newspapers and a tender’s journal is sold at local newspaper outlets.
The Government of Nigeria seeks to conduct open and competitive bidding processes for government procurement. Reforms have also improved transparency in procurement by the state-owned Nigerian National Petroleum Company, Limited (NNPCL). Although U.S. companies have won contracts in many sectors, difficulties in receiving payment are common and can discourage firms from bidding. Subsidized or concessionary financing arrangements appear in many cases to be a crucial factor in the award of government procurements. Persistent transparency shortcomings create challenges for a fair bidding process and often lead to allegations of corruption.
Intellectual Property
Enforcement of intellectual property rights (IPR) remains a problem in Nigeria. Nigeria’s legal and institutional infrastructure for protecting intellectual property rights requires further development and resources. Laws exist to enforce some but not all IPR violations. In 2023, former President Mohammadu Buhari signed the Copyright Bill of 2022, adding it to the other two key bills: the Patents and Designs Act, and the Trademarks Act.
Violations of Nigerian IPR laws are widespread, due in large part to a culture of inadequate enforcement. Demand for brand names, especially U.S. brands, creates a market for fake goods often creating health and safety hazards for consumers. Especially vulnerable to IPR violations are fast moving consumer goods with packaging that is easily counterfeited in Asian markets and brought into the country. Furthermore, corruption and insufficient resources among enforcement agencies, lack of political will and focus on IPR, porous borders, and entrenched trafficking systems make enforcement difficult. There is also a low level of public awareness of IPR laws among rights holders and those who violate those rights. Nigeria’s domestic creative industries are growing fast, including its Afrobeats music and the “Nollywood” film industry, prompting more local awareness of the importance of IPR protections.
Regional Security
In 2024, Nigeria’s security landscape remained difficult, with banditry and violent criminality intensifying in the South-East and North-West, adding to long-standing challenges in the North-East and other regions. While Boko Haram’s influence has waned, largely supplanted by ISIS-West Africa (ISIS-WA), the terrorist threat in the North-East and elsewhere persists through sporadic asymmetric attacks. Boko Haram’s diminished role follows successful military operations by Nigeria and its regional neighbors, but ISIS-WA continues to expand its presence across northern Nigeria and into Chad and Niger. In the South-East, violent separatist movements and criminal bandit groups have escalated attacks, targeting infrastructure, local communities, and government assets. Kidnappings for ransom remain widespread, not only in the North-West but also in the South-East, with criminal gangs routinely abducting both Nigerians and foreign nationals.
The Nigerian government has increased efforts to address these multi-faceted security threats, seeking international cooperation and increased military capacity. Maritime piracy in the Gulf of Guinea, although still a concern, has seen some progress with increased naval patrols. In urban centers such as Lagos, violent crime, including armed robberies and theft, continues to affect residents and visitors. Despite improvements in some areas, law enforcement remains stretched and is often slow to respond, and under-resourced in many regions. The Nigerian government is also working to improve infrastructure amid these security challenges, with a focus on enhancing the country’s resilience and economic stability