Nigeria’s ambition to grow into a $1 trillion economy will rise or fall on the strength of its states, as mounting evidence shows that weak institutions, poor project preparation, and low investor confidence at the subnational level continue to limit the country’s ability to convert potential into sustained economic growth.
Terhemen Johnpaul Kpenkaan, Executive Secretary of the Benue Investment Promotion Agency (BENIPA), who also chairs the Forum of State Investment Promotion Agencies of Nigeria (FoSIPAN), in a comprehensive reform analysis on Nigeria’s investment landscape has said.
Kpenkaan, in his report, argued that while Nigeria has the population size, natural resources, and entrepreneurial energy required to support a significantly larger economy, the real battleground for growth lies not in federal policy declarations but in state-level execution, where land is allocated, permits are issued, infrastructure is built, and businesses operate.
According to him, “a trillion-dollar economy is not a speech but a system,” stressing that economic transformation depends on the ability of institutions across states to prepare, coordinate, and deliver bankable projects.
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He noted that industrialisation and investment are territorially anchored, meaning that states control many of the key levers that determine whether investors move from interest to implementation.
“These include land access, local planning systems, permitting processes, intra-state logistics, and coordination of public-private partnerships”, he added.
Despite growing investor interest in Nigeria, Kpenkaan said the country’s biggest challenge is not a lack of opportunity but uneven institutional capacity across its 36 states.
He cited capital importation data showing that although foreign inflows surged by about 215 per cent in 2024 to $12.3 billion from $3.9 billion in 2023, the investments were concentrated in just a handful of locations, Lagos, the Federal Capital Territory, Kaduna, Enugu, and Ekiti, leaving most states without any foreign capital inflows.
“The implication is clear: capital is entering Nigeria, but it is not reaching most of its states,” he said, attributing the imbalance to differences in governance quality, institutional readiness, and project preparation capacity.
Kpenkaan identified five major structural “fault lines” undermining subnational investment performance, warning that unless they are addressed, Nigeria’s broader economic ambitions may remain out of reach.
The first, he said, is the absence of a clearly defined investment readiness framework.
“Despite years of policy focus on investment promotion, there is still no uniform benchmark for assessing whether a state is prepared to attract and sustain investment.
“This lack of clarity creates confusion for governments, increases transaction costs for investors, and weakens coordination among development partners”, he added.
He stressed the need for a shared national framework built around measurable indicators such as legal readiness, institutional capacity, project preparation systems, governance discipline, and investor servicing.
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“These are the baseline infrastructure of an investment-ready state,” he said, noting that without clear standards, investment promotion efforts risk becoming largely ceremonial.
“The second fault line is the mismatch between responsibility and authority within State Investment Promotion Agencies (SIPAs).
“While these agencies are tasked with attracting and facilitating investment, many lack the operational authority needed to coordinate across ministries and resolve bottlenecks.
“They can advise, but they cannot compel,” Kpenkaan said, warning that this limitation often reduces SIPAs to messaging platforms rather than effective delivery institutions.
To address this, he proposed a tiered authority framework that clearly defines operational, coordination, and advisory roles, alongside the establishment of Investment Facilitation Committees to strengthen inter-agency coordination, track approvals, and resolve disputes.
The third challenge is the impact of political dynamics on investment continuity.
Kpenkaan noted that projects in many states are tied to individual administrations rather than institutional systems, making them vulnerable to delays, renegotiation, or abandonment when leadership changes.
He advocated for governance structures that outlive political cycles, including project charters, transition audits, and revalidation mechanisms to ensure continuity.
“Politics is inevitable. Institutional fragility is not,” he said.
The fourth fault line, which he described as one of the most critical, is weak project preparation.
Many projects, he said, are announced before they are fully developed, lacking proper feasibility studies, environmental assessments, financial modelling, and risk analysis.
“Preparation is the bridge between ambition and capital,” he said, emphasising that investors will only fund projects that can withstand rigorous due diligence.
He called for the establishment of dedicated project preparation funds to support early-stage work such as feasibility studies, legal structuring, and transaction advisory.
Kpenkaan outlined a five-phase project development process, screening, technical due diligence, risk structuring, legal structuring, and independent review, as essential to building credible investment pipelines.
He cited the concessioning of the National Food City Complex as an example of how disciplined preparation and structured governance can transform development concepts into bankable investment opportunities.
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The fifth and final challenge is weak investor confidence driven by low institutional credibility.
Kpenkaan said investors, including domestic ones, are often reluctant to commit capital when governance systems appear unpredictable or unreliable.
“Credibility attracts capital faster than promises,” he said.
He noted that restoring confidence requires visible reforms such as digitised permit systems, transparent land allocation processes, investor grievance mechanisms, and regular publication of project and performance data.
He also stressed the importance of delivering early “flagship projects” that move successfully from preparation to financial close, as these serve as proof that a state’s investment system works.
Kpenkaan warned that failure to address these structural weaknesses carries significant economic costs.
“Poorly prepared projects and inconsistent governance increase the cost of capital, delay investment decisions, and drive investors to more predictable markets”, he said.
The impact, he said, includes stalled agro-industrial development, underdeveloped logistics networks, limited industrial growth, rising youth unemployment, and heightened insecurity linked to economic stagnation.
“If states do not become investment-ready, Nigeria will continue to pay a premium for uncertainty,” he warned.
Despite the challenges, Kpenkaan said meaningful reform is achievable within 18 to 24 months if states adopt a structured and time-bound approach.
He outlined a phased reform pathway that includes baseline assessments, gap identification, implementation, and certification.
“Within this period, states can establish investment readiness frameworks, professionalise SIPAs, create project preparation funds, improve investor servicing, and introduce mechanisms to protect projects from political disruption”, he noted.
He recommended that each state begin with a comprehensive investment readiness audit within its first 100 days of reform to identify institutional gaps and set priorities.
According to him, the benefits of reform are cumulative. Improvements in governance reduce risk, lower the cost of capital, accelerate project timelines, and increase investor confidence, creating a virtuous cycle of investment and growth.
He also called for stronger alignment between federal and state governments, suggesting that national incentives and development partner support should prioritise states that demonstrate credible reform progress.
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Kpenkaan noted that achieving Nigeria’s $1 trillion economic ambition will ultimately depend on leadership at the state level.
He urged governors to prioritise institutional discipline, strengthen coordination across public agencies, and treat investment delivery as a core governance responsibility.
“The real test of reform is not what is launched during one administration, but what survives into the next,” he said.
According to him, Nigeria’s economic transformation will not be driven by ambition alone but by the ability of its states to build systems that consistently prepare, coordinate, and deliver investment projects.
“The question is no longer whether subnational competitiveness matters. The question is which states will act, and which will be left behind”, he added.
