Nigeria’s Risk Profile, Trade Barriers Deter U.S. Investors Amid Growing Commercial Interests
American businesses are growing wary of Nigeria’s business environment on the back of complex regulatory regimes and border restrictions, which have stalled trade, said Richard Mills, the U.S. Ambassador to Nigeria, on Thursday.
His statement comes amid the US announcement of its “Commercial Diplomacy Strategy for Sub-Saharan Africa,” which seeks to shift bilateral discussions away from aid towards expansive trade and investment for “mutual prosperity.”
“We’re engaging African nations not as aid recipients, but as capable commercial partners,” Mills said. But he added that the success of this approach hinges on Nigeria’s ability to win the confidence of American investors.
“There’s still a perception in the business community that Nigeria may be a risky place to do business compared to other parts of Africa,” Mills said during a fireside chat in Lagos, noting that frequent changes in foreign exchange policies, congestion at the ports, unclear mandates of agencies both online and at entry points, and an overwhelming tax regime remain red flags for investors.
He described how some U.S. companies have had to exit Nigeria because of years of losses stemming from operational and forex challenges. Others have stayed, but are more cautious.
Mills said that some U.S. businesses have had to contend with up to 67 different taxes, including levies for wheelbarrows straining profits. He warns this could spook the estimated 300,000 U.S. export-ready firms now eyeing the African market.
“When companies make decisions on where to do business, they seek out environments that are rules-based and predictable,” he said. “The tune I hear the most is a feeling of an untransparent regulatory environment. It’s hard to know when the rules will shift.”
Still, American capital remains influential, especially in Nigeria’s tech space, with 60 percent of venture capital inflows originating from the United States.
The U.S. ambassador took a shot at current tariff structures, particularly in agriculture, where import bans are restricting the entry of goods that the U.S. believes could help boost food production.
“Import tariffs restrict Nigeria from importing agric products which is not the ideal way to support the sector,” he said.
He linked part of the current tension to the 14 percent tariffs imposed by former President Donald Trump on Nigerian goods, but says it is ready to negotiate.
“Come back to us and address the trade barriers to U.S. imports into Nigeria, so we can make those tariffs go away,” he said.
Later this month in Abuja, the U.S. prepares to formally launch its Commercial and Investment Partnership (CIP) with Nigeria. The agreement, signed last year, is a five-year initiative targeting growth in agriculture, the digital economy, and infrastructure through greater collaboration between the two countries’ private sectors.
The country’s intensified interest in Africa naturally surfaced questions about whether it is seeking to counter China’s growing influence on the continent. But Mills rejected the idea of a rivalry.
“We’re not asking Nigeria to choose a side,” he said. “We only want to ensure that the Nigerian government makes those business choices with full knowledge of what they’re buying into.”
“If the government has all the information about, say, who is building the bridge or supplying the infrastructure, that’s fine, but the free market will say the American is the best.”
