Nigeria’s economic aspirations are being severely hindered by deep-rooted governance issues, according to a new report from the African Development Bank (AfDB), released in Abuja this week. The 2025 Nigeria Country Focus Report, titled “Making Nigeria’s Capital Work Better for Its Development”, highlights critical governance shortcomings that undermine the country’s efforts to mobilise domestic development finance, despite recent reforms.
The report outlines a troubling picture of Nigeria’s struggles to attract and effectively utilise resources for national development, pointing to fragmented regulatory oversight and inconsistent coordination among government bodies. These governance inefficiencies, coupled with persistent corruption, have eroded public trust, discouraging both domestic and foreign investments.
“Governance and institutional shortfalls further complicate the domestic resource mobilisation landscape, impeding Nigeria’s ability to capitalise on its wealth,” the report states. It adds that overlapping institutional mandates, weak regulatory frameworks, and pervasive corruption have made it challenging for Nigeria to build a robust, sustainable economic model.
AfDB’s Director General for Nigeria, Dr. Abdul Kamara, commented on the urgency of addressing these governance issues, stating, “Nigeria is demonstrating bold leadership through difficult but necessary reforms. What this report shows is the need for integrated strategies that make every form of capital work together to drive inclusive and sustainable transformation.”
The report goes on to stress the importance of institutional reform, recommending a streamlined approach to administrative processes, stronger anti-corruption frameworks, enhanced digital infrastructure, and the reinforcement of the rule of law.
Development Financing Gap: $31.5 Billion Shortfall
Nigeria is currently facing a daunting annual development financing gap of $31.5 billion, as it strives to meet the Sustainable Development Goals (SDGs) by 2030. While recent tax reforms have spurred modest revenue growth, the country’s tax-to-GDP ratio remains among the lowest in the region, at approximately 13%. This reflects challenges in the country’s informal economy, weak tax compliance, and inefficiencies within public finance administration.
In addition to these fiscal challenges, the report draws attention to Nigeria’s declining natural capital, noting that resources such as agricultural land, forests, and renewable energy are being depleted at a rapid rate. Since 1999, per capita natural capital has declined at an average rate of 2.1% per year.
Furthermore, Nigeria’s human capital development remains inadequate, with spending on education and healthcare falling short of what is necessary for long-term productivity growth. The country’s Human Capital Index remains low at just 36%, highlighting the need for greater investment in human development to support sustainable economic growth.
Strategic Recommendations for Long-Term Growth
To overcome these systemic barriers, the AfDB report suggests a multifaceted approach that includes enhancing governance structures, promoting transparency, and building a robust legal and financial framework that supports sustainable development. Strong institutions, it argues, are vital for Nigeria to capitalise on its resources and effectively channel investments into long-term development.
Dr. Kamara concluded, “The challenges are significant, but the solutions are clear. Nigeria must streamline its institutions, enhance governance, and ensure that all forms of capital—financial, human, and natural—are working together towards sustainable development.”
The AfDB’s findings highlight a need for bold reforms and efficient governance to unlock Nigeria’s potential. Without these critical changes, the country’s economic trajectory risks stagnation, further impeding efforts to address widespread poverty, inequality, and infrastructural deficits.
