Seychelles and Mauritius have once again emerged as Africa’s most attractive investment destinations, with Nigeria falling to 18th position, according to the new Where to Invest in Africa 2025/2026 report by Rand Merchant Bank (RMB).
The two island nations retained their positions at the top of the index, supported by stable macroeconomic environments, strong governance, and niche but high-value market appeal, particularly for financial and professional services
However, Nigeria has fallen nine places to rank 18th, marking the country’s sharpest decline in recent years as currency reforms, inflationary pressures, and lower dollar GDP have reshaped investor perceptions.
The index, which assesses African economies based on market size, economic growth outlook, and operating environment, highlights both Nigeria’s unmatched market potential and the macroeconomic headwinds weighing on its investment competitiveness.
RMB attributes Nigeria’s fall largely to a steep contraction in Nigeria’s GDP in US-dollar terms driven by naira depreciation alongside structural vulnerabilities and short-term disruptions triggered by recent policy reforms.
The report explains that although Nigeria’s long-term fundamentals remain strong, “context and clarity” are required to interpret the numerical swing.
It said one major factor is the collapse of multiple exchange rates into a single, market-driven window on June 23, 2023, a decisive move by President Bola Tinubu to dismantle a long-standing managed currency regime he described as “a noose around the economic jugular.”
“The shift caused the naira to weaken from N463/$ in June 2023 to ₦897/$ by year-end, slashing Nigeria’s GDP (in dollar terms) from $374.95 billion to $187.64 billion before a subsequent rebasing.”
The report highlights Nigeria’s decades-long overreliance on oil, comparing its output and revenue yields with those of major oil-producing countries.
“While Saudi Arabia pumped around 9 million barrels per day in 2024 with a population of 35 million, Nigeria produced roughly 1.5 million barrels per day for over 232 million people. At an oil price of $67 per barrel, this translates to $6,300 annually per Saudi citizen versus just $161 per Nigerian,” the bank disclosed.
Volatile oil prices continue to challenge Nigeria’s fiscal stability. While the country’s 2025 budget was benchmarked at $75/bbl, prices have slipped below this level, amplifying pressure on revenue and external reserves.
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Inflationary pressures and subsidy reforms
Inflation remains one of Nigeria’s toughest battles. The removal of petrol subsidies in mid-2023 triggered a 167 percent surge in fuel prices, pushing living costs higher and constraining consumer purchasing power.
It said, “Although Tinubu justified the policy as necessary to free up resources for better investments in infrastructure, healthcare, and jobs, rising inflation prompted the government to later reintroduce implicit subsidies by capping petrol and electricity prices.”
The International Monetary Fund warns that such implicit subsidies may cost up to 3 percent of GDP, straining already tight public finances.
Rebasing Lifts GDP by 30%
In a new twist, Nigeria’s National Bureau of Statistics revised the country’s GDP base year from 2010 to 2019, expanding previously underestimated sectors such as digital services, pensions, and the informal economy.
The rebasing revealed that Nigeria’s economy is 30 percent larger than earlier reported, reaffirming its status as Africa’s biggest market despite short-term disruptions.
According to NBS, Nigeria’s economy expanded in the third quarter (Q3) of 2025, extending its annual growth that picked up to a four-year high in the previous quarter on improvements in the oil sector.
The country’s GDP surged to 3.98 percent year-on-year in Q3, compared to 3.86 percent it recorded in the corresponding period last year.
RMB noted that while data revisions illustrate the volatility of economic measurements, the underlying WTIIA model remains robust: “Most country scores move gradually year to year in ways consistent with economic logic.”
Optimism despite the decline
Despite being this year’s biggest decliner, the report says Nigeria still offers strong prospects, particularly in technology, services, agriculture, and its expanding informal sector.
The current reforms, though painful, are viewed as potentially transformative steps toward a more diversified and resilient economy.
“As the Tinubu administration recalibrates Nigeria’s macroeconomic foundations,” the report notes, “the long-term question is whether today’s disruptions will pave the way for a more prosperous, less oil-dependent future.”