Finnfund’s economist Tangeni Shatiwa: “Investor confidence in Nigeria got a boost”

The current government of Nigeria has implemented a series of bold policy reforms to address structural weaknesses of the country. The reforms have provided a boost to growth in the country thus far and have put Nigeria back on the path towards reaching macroeconomic stability over the next few years. The Finnish impact investor Finnfund sees many positive signs in sight.

“The progress has helped Nigeria to return to international capital markets at the end of 2024 after years of limited access, while also earning a credit rating upgrade in April of this year, which shows investor confidence is improving in the country,” describes Finnfund´s economist Tangeni Shatiwa in his report “Focus on Nigeria – Finnfund Insights“.

Nigeria’s economy holds strong potential, supported by its large natural resources and favourable demographics. The UN expects its population to grow by 54 percent between now and 2050 – one of the fastest-growing globally. The large and rapidly growing consumer base that will come from this, together with increasing urbanisation, has the potential to create sizable opportunities for private companies in Nigeria.

Also, this will allow the private sector to capitalise on a youthful, entrepreneurial workforce to drive productivity growth. Despite this potential, Nigeria has largely failed to capitalise on it over the years, and several policy mistakes drove the country into its worst macroeconomic crisis in decades during 2022-23.

But now the investors see attractive prospects, especially for Nigeria’s digital and financial sector.

“We believe that Nigeria’s telecommunications market offers significant investment opportunities due to its low broadband internet subscription rate, which is currently less than half of the population. This is well below Nigeria’s regional peers, which indicates a largely untapped market with potential for profitable investments,” says Finnfund´s investment manager Niklas Simola.

In 2024, Nigeria regained its position as the top VC destination on the continent by attracting $520 million in funding across 103 deals. The majority of these deals are in the fintech sector, a trend Finnfund is observing in many of its markets. In the financial sector, performance has been strong in recent years despite the macroeconomic challenges.

“Although we expect profitability in the financial sector to moderate over the next few years in line with declining interest rates, the sector-wide re-capitalisation effort, which is currently underway, will ensure that the banks are more resilient to future downturns. We have invested in several banks within the sector to support on-lending to MSMEs, which is an important engine for creating jobs in a country where a large portion of the work-aged population is self-employed,” says portfolio manager Väinö Esilä, Finnfund.

Despite positive prospects, there are many critical issues to be solved.

“Moving ahead, the authorities will need to address issues around electricity reliability, security and access to finance to fully unlock growth in the private sector and raise living standards for Nigerians,” reminds Shatiwa.

More information

Economist Tangeni Shatiwa, tangeni.shatiwa@finnfund.fi, tel +358 40 562 8917

Chief Communications Officer Unna Lehtipuu, unna.lehtipuu@finnfund.fi, tel. +358 40 624 0896

Finnfund is a Finnish development financier and impact investor. Finnfund builds a sustainable future and generates lasting impact by investing in businesses that solve global development challenges with Finnish added value. Each year, we invest 200–250 million euros in 20–30 companies in developing countries. Our focus is particularly on digital infrastructure and solutions, clean energy, forestry, agriculture, and on providing funding for small and medium-sized enterprises through financial institutions. Today, Finnfund’s investments, commitments, and investment decisions total about 1.3 billion euros. The company has about 100 employees based in Helsinki and Nairobi. For more information, please visit www.finnfund.fi.