Nigeria and other developing countries could find it harder to attract the foreign investments they depend on to grow their economies as rising global uncertainty, trade disputes and geopolitical tensions make investors more cautious, the United Nations Conference on Trade and Development (UNCTAD) has warned.

In its 2026 World Investment Report, titled International "Investment in a Turbulent Era", UNCTAD said foreign direct investment (FDI) remained the biggest source of external financing for developing economies in 2025, accounting for about half of all external funding, more than remittances, official development assistance and portfolio investments.

The report explained that FDI is especially important because it does more than bring in money. It helps countries build industries, create jobs, transfer technology and connect local businesses to global supply chains.

However, UNCTAD warned that prospects for attracting such investments this year remain bleak.

According to the report, the outlook for FDI in 2026 is “highly uncertain,” as slower global economic growth, trade policy uncertainty, geopolitical tensions and armed conflicts continue to discourage investors from committing fresh capital.

The organisation said many multinational companies are likely to delay, suspend or even cancel planned investments until the global business environment becomes more stable.

“The strong balance sheets of leading firms may support investment in high-value industries but risk further concentrating FDI in a narrow set of sectors and locations,” the report said.

The warning comes at a time when Nigeria is seeking more foreign investment to drive industrialisation, create jobs, boost exports and reduce pressure on public finances.

UNCTAD said the report highlights the need for Nigeria and other developing countries to strengthen their investment climate by improving infrastructure, ensuring policy consistency and creating conditions that attract long-term productive investments.

Although foreign investment into the world’s least developed countries rose by 21 per cent in 2025, most of the increase went to a few resource-rich nations, while many poorer economies continued to struggle to attract investors.

Small island developing states also recorded relatively low investment inflows, with most projects concentrated in tourism, renewable energy and logistics.

According to UNCTAD, many structurally weak economies continue to receive limited investment because of small domestic markets, higher business risks and weak participation in fast-growing sectors of the global economy.

For Africa, the report showed that FDI inflows increased by 2 per cent to $70 billion in 2025. Although this was lower than the exceptional $94 billion recorded in 2024, when a few mega deals boosted investment figures, it still ranked as the continent’s third-best performance since 1990.

UNCTAD noted that while the total value of new greenfield investment projects across Africa fell by almost one-third, the number of announced projects actually increased, indicating that investors are pursuing more smaller-scale projects rather than a few large investments.

Most of the investments were concentrated in energy infrastructure, mining, renewable energy and critical minerals, sectors that continue to attract global interest because of the energy transition.

Summing up its findings, UNCTAD said “the findings reinforce the urgency for developing economies to strengthen domestic investment frameworks, diversify their productive base and improve competitiveness in order to attract more resilient and sustainable foreign investment in an increasingly volatile global economy”. (The Sun)