Nigeria’s ambition to achieve a $1 trillion economy is facing significant risk due to persistent structural weaknesses at the state level, according to a new reform analysis on the country’s investment landscape.
Terhemen Johnpaul Kpenkaan, Executive Secretary of the Benue Investment Promotion Agency (BENIPA) and Chairman of the Forum of State Investment Promotion Agencies of Nigeria (FoSIPAN), stated that while Nigeria has the population, resources, and entrepreneurial capacity to support rapid economic expansion, progress is being hindered by poor execution across states.
He emphasised that real economic growth depends less on federal policy declarations and more on how effectively states manage key responsibilities such as land allocation, permits, infrastructure development, and business operations.
Describing a trillion-dollar economy as “a system, not a speech,” Kpenkaan noted that success will depend on how well state institutions can prepare and deliver viable, investment-ready projects.
Despite increased investor interest in Nigeria, capital inflows remain unevenly distributed. Data shows foreign investments rose sharply to $12.3 billion in 2024 from $3.9 billion in 2023, but were largely concentrated in a few locations, including Lagos, the Federal Capital Territory, Kaduna, Enugu, and Ekiti, leaving many states without meaningful inflows.
Kpenkaan identified five major challenges undermining investment performance at the subnational level. These include the absence of a clear investment readiness framework, limited authority of state investment agencies, political interference affecting project continuity, weak project preparation, and low investor confidence due to poor institutional credibility.
He explained that many state investment agencies lack the power to coordinate across ministries or resolve bureaucratic bottlenecks, reducing their effectiveness. Additionally, projects are often tied to political administrations, making them vulnerable to abandonment or renegotiation when leadership changes.
Another critical issue is inadequate project preparation. Many initiatives are announced without proper feasibility studies, financial modelling, or risk assessments, making them unattractive to investors.
Kpenkaan stressed that improving investor confidence will require transparent governance systems, including digitised permit processes, clear land allocation systems, and mechanisms to address investor concerns.
He warned that failure to address these issues could lead to higher costs of capital, stalled industrial growth, rising unemployment, and increased insecurity linked to economic stagnation.
However, he expressed optimism that meaningful reforms are achievable within 18 to 24 months if states adopt structured approaches, including investment audits, institutional strengthening, and improved project development systems.
Kpenkaan concluded that Nigeria’s economic transformation will ultimately depend on the commitment of state governments to build strong, reliable systems capable of attracting and sustaining investment.
“The question is no longer whether states matter,” he said, “but which ones are ready to act and which will be left behind.”
