Continuous governance failures are frustrating Nigeria’s efforts to mobilise development finance, the African Development Bank has said, via its 2025 Nigeria Country Focus Report.
The report, titled “Making Nigeria’s Capital Work Better for Its Development,” sheds light on how Nigeria has been failing to attract and effectively use domestic resources to fund national development.
According to AFDB, the fragmented regulatory oversight, disorganized institutional mandates, and restricted coordination among government bodies keep eroding public trust and discouraging investment in Nigeria.
The report stated that governance and institutional failures have gone a long way towards complicating development funds, which further restricts Nigeria’s ability to channel its wealth properly.
“Governance and institutional shortfalls further complicate the domestic resource mobilisation landscape, impeding Nigeria’s ability to capitalise on its wealth.
Fragmented regulatory oversight, overlapping jurisdictions between federal and subnational entities, and pervasive corruption have eroded public trust and discouraged both domestic and foreign investment.
These constraints not only widen the development finance gap but also stunt the broader economic transformation process. Tackling them requires a strategic overhaul — streamlining administrative processes, enforcing robust anti-corruption measures, developing digital infrastructure, and reinforcing the rule of law,” it read.
The 2025 Nigeria Country Focus Report is coming at a time when the nation is chasing bold policy changes, including fuel subsidy removal, exchange rate unification and tax restructuring.
However, AFDB has warned that if the lack of vibrant institutions and governance frameworks continues, the reforms will not have the desired impact.
Despite the recent tax reforms triggering modest revenue growth, Nigeria’s tax-to-GDP ratio remains among the lowest in the region, estimated at around 13 per cent.
That reality, according to the report, is a true reflection of a large informal economy, weak tax compliance, and inefficiencies in public finance administration.
The report also highlighted Nigeria’s declining natural capital and underinvestment in human capital development.
The African Development Bank concluded by urging Nigeria to boost public investment in health and education, while enhancing its technical and vocational training systems in order to increase productivity and decrease inequality.
