Lately, when I think about our economy, events keep pushing investment issues into public conversation. This time, it's all about how much we invest. Nairametrics has sparked discussions with various opinions from people inside and outside the government. I see the situation differently, but it is still significant. A few weeks ago, I called one of our statistics officers to ask how investment is counted in Gross Domestic Product (GDP). As we know, GDP is often calculated as C+I+G+Nx, which means Consumption, Investment, Government Expenditure (minus Taxes), and net Export are key factors. I was concerned that we are not taking Domestic Investment as seriously as we should, especially in a growing, mostly informal economy. Let me explain.
First, let’s look at the noise around Foreign Direct Investment (FDI) in Nigeria. Nairametrics reported that Nigeria attracted $10 billion in foreign investment in Q1 2026, with $6.5 billion going into Treasury Bills. They also noted that out of the $45 billion in investments for 2025, $13 billion went into money market instruments. This shows that foreign investors prefer short-term returns rather than long-term growth. I agree with Nairametrics that Nigeria should seek investments that help to build factories, create jobs, transfer technology, and provide long-term benefits. But this is where things get tricky. It is easy to criticize from the outside as if it is simple. I respect Nairametrics, as they are not a frivolous or biased platform. I call on Ugodre and Nairametrics to take a more serious approach and understand that they cannot afford to follow the shallow analysis of others. A solid financial and economic analysis platform can improve with help from the rest of us for a better Nigeria.
I needed a term to describe the type of analysis that has become common in Nigeria. Many influencers and self-styled economists often focus on the negatives of a policy while ignoring any benefits. Those who support policies are also warned against only highlighting the positives. In my public talks, I remind audiences that the best any policy can achieve is pareto-efficiency, where 80 percent benefit while 20 percent may get worse off. When inflation dropped in 2025, many farmers complained to me via WhatsApp about government grain imports, despite food prices falling. I urged them to be patient, noting that since 90 percent of Nigerians are non-farmers, the policy was beneficial overall. Nigerians needed relief from food price hikes in 2023 and 2024.
I asked AI for a name for this popular analysis style, and it suggested the following:
- When an analyst focuses only on disadvantages while ignoring advantages, this is one-sidedness or cherry-picking.
- Cherry-Picking (the Fallacy of Incomplete Evidence) means selectively highlighting facts that support an argument while ignoring contradictory evidence.
- Appeal to Consequences (Argumentum ad Consequentiam) tries to prove a policy is wrong by focusing only on its negative outcomes without assessing its actual merits.
- Negativity Bias is when individuals pay more attention to negative information.
This is the first major flaw in Nairametrics' analysis of foreign investment in Nigeria. There are more flaws to discuss. One issue is the naïveté regarding the current global economy. Where do we even start? Mr. Trump has been focused on protectionism to save the American economy. He has good reason, as the American economy is struggling. He pressured other countries with high tariffs, which made everyone feel the heat. He has gathered top American entrepreneurs in the Oval Office to get commitments from them, sometimes under duress. Recently, Prime Minister Mark Carney of Canada mentioned ‘Middle Powers’ uniting against the US to fight economic dominance, affecting countries like Nigeria. I wrote about this new reality some time ago.
In the meantime, countries have reacted. The Africa Continental Free Trade Agreement (AfCFTA) seems to be gaining traction as Africans realize that no one is coming to save us. We are in a time of nationalism. The World Bank released a report in March 2026 urging countries to industrialize, pushing economic nationalism. In Nigeria, President Tinubu has focused on building internal strengths, becoming less vulnerable, and increasing industrialization, especially by adding value to agricultural products and minerals. Some results include a 50 percent rise in manufacturing exports, N87 billion in solar panel exports to West Africa and the USA in 2025, and billions in refined petroleum product exports by Dangote Plc, which is now the world’s largest exporter of JetA1 fuel. There are also three Lithium-processing companies with over $1.2 billion in investment across Abuja, Nasarawa, Ebonyi, and Kwara states. Nairametrics’ analysis seems to push a one-sided view rather than presenting a complete picture of Nigeria's economy under President Tinubu.
Next, let’s address investments. Investopedia defines investment as ‘an asset or property acquired to generate income or gain appreciation.’ This simple definition captures the essence. In macroeconomics, investments are split into domestic and foreign. However, I believe Nigeria has focused too long on foreign investments. Nairametrics falls into this trap too. In our mostly informal economy, can we generate domestic investments faster than foreign? I think so. What led us to believe our salvation comes from abroad, especially now that every country is holding on tight? It feels like learned helplessness, making us ignore our resources while looking to others. This mindset reflects some level of neo-colonialism and economic enslavement that we need to overcome.
Calculating foreign investment is straightforward. These investments come through official channels at the Central Bank of Nigeria. Nairametrics overlooks that major capital investments include technology, infrastructure, equipment, and human capital, as pointed out by Dr. Tanimu Yakubu and Mr. Bode Opeseitan. Commitments in our oil and gas sector are already underway, but we will see the impact when international oil companies boost production. Over time, most FDIs in Nigeria have flowed into oil and gas. FDI spikes when crude oil assets are developed and drops when oil prices fall globally. There is a clear relationship between crude oil prices and investment since high prices increase margins.
The situation has changed; Nigeria is now promoting local companies in oil and gas and other sectors. Companies that make cables, cement, cars, electronics, and other products are now mostly Nigerian. The narrative of a collapsing economy doesn’t hold up under scrutiny. Strong Nigerians are taking over critical sectors while the doomsayers are left behind. Nigeria’s imports have dropped by 30 percent annually, while exports have risen by 40 percent in dollar terms. This is real progress. In the oil sector, Nigerians have taken control of many IOCs’ assets. Seplat is now the new Mobil, and Renaissance is the new Shell, while companies like Heirs Energy, OANDO, Green Energy, Famfa, Amni, Aiteo, Conoil, First E&P, ND Western, and Waltersmith are producing over 50 percent of Nigeria’s daily crude oil output. This is a significant achievement under this administration. But I often ask, if these companies expand or invest today, will it count as foreign or domestic investment? If it counts as domestic, why do we ignore domestic investments while glorifying foreign ones? For instance, when Dangote invests in Tanzania or Ethiopia, they label it as foreign capital. But most of his investments are here in Nigeria, which we overlook in our analyses. We need to respect our domestic investors rather than disregard them. Nairametrics and others in the private sector should avoid aligning with ignorance.
Foreign investors are smart; they don’t need convincing. Trying too hard to convince them makes Nigeria less attractive. It would help if Nigerians realized that they harm the country by always highlighting negatives and condemning Nigeria. Foreign investors see that we display immaturity in advancing our nation’s interests. You rarely hear Americans talk about the thousands who die from gun violence every year. We must promote our domestic investments to attract foreign investors. Building a factory requires understanding that there is a viable market compared to other countries. Investors need to know that Nigeria is investing in essential infrastructure, as President Tinubu is doing. They must see that Nigeria is not a hell hole, as some insist. Foreign business owners can live here peacefully. They need to know they can find trustworthy Nigerian workers, even with AI taking over jobs. We must recognize the urgency of our words and writings, or we will become our own worst enemies. Thankfully, Turkish, Chinese, Lebanese, and Indian investors are coming to Nigeria and even nationalizing their businesses here. Maybe that’s why their new investments are now in the domestic space, not foreign.
It’s also important to remember that foreign portfolio investments, or hot money, are not entirely useless for economic growth. Nigeria has attracted many portfolio investors, which form a pool of resources for the economy. If long-term growth comes from several short-term gains, then they do contribute to economic growth. Additionally, if our financial system shows substantial portfolio investments, it encourages local banks to lend more, reflecting confidence in our financial system. Foreign investments in our stock markets help them recover and attract more domestic investors, which strengthens the market and encourages more listings. This is how economies grow, not by amplifying every potential disaster.
Now, let’s critically examine domestic investment. According to the National Bureau for Statistics (NBS), domestic investment in Nigeria is measured as Gross Capital Formation (GCF), which reflects the total value of capital acquisitions minus disposals and changes in business inventories. The data is compiled alongside the CBN using two formulas.
- The Output/Expenditure Formula, Under national income accounting, domestic investment is calculated as:
GFCF includes spending on physical additions to the capital stock, like machinery, tools, and infrastructure development. Changes in Inventories are calculated by subtracting the total inventory value at the start of the year from the total at the end.
- The Macroeconomic/Investment Formula, For broader economic modeling, both Private and Public investments are considered:
Measuring direct private domestic investment can be tricky in emerging markets. Economists often use Credit to the Private Sector from deposit banks as a proxy. Public investment usually comes from public capital expenditure in government budgets.
It’s clear that these formulas mainly focus on the formal sector. Using credit to the private sector as a proxy in an economy with many MSMEs, most of which don’t use credit, is problematic. Capturing purchases of equipment and inventory in an economy where most businesses don’t keep records is also tough. Investment means spending on assets for profit. Our extensive informal economy is built on that. Every time a worker uses part of his salary to set up a shop for his wife or adds rooms for rent, that is investment. We do these activities more frequently than in other developing countries. We can’t measure domestic investment just by formulas; we need to gather primary data and do the hard work.
Looking at Nigeria now, some states are transforming. President Tinubu’s reforms have released liquidity to the states. Nigerians should observe what’s happening in Ogun, Niger, Ekiti, Ondo, Enugu, Abia, Imo, Anambra, Kano, Kaduna, Gombe, and others. Governors in these states focus on infrastructure, industries, and agriculture. I sometimes urge them to improve their borrowing balance between federal and state governments. Lagos is leading the way. The Ikoyi area is transforming, and areas like Lekki, Ibeju, Ikeja, Agege, Mile 2, and Badagry are also seeing investment. Money is flooding into the real estate sector, which has become the third-largest contributor to GDP. Just last week, billionaire Mr. Jim Ovia said real estate investments are more profitable than banking. He and his peers are set to continue transforming our city while the pessimists remain stuck in gloom.
Finally, we need some key measures to protect local businesses and domestic investments beyond the World Bank’s advice. For example, we can measure the success of new tax reforms in reducing multiple taxes. We could also assess how easily local businesses can secure contracts in various sectors. This approach can help protect domestic investments, which matter more because most growth we’ve seen lately comes from them. We should encourage wealthy individuals to invest locally, like Jim Ovia and others are doing. We must break free from this exaggerated dependency and improve our attractiveness to reliable foreign investors.
Two fun facts: First, any investment you make in Nigeria to earn a profit is a step in the right direction for your country. Second, if we accurately capture domestic investments, we could add another 10 percent to our GDP.
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