In the Heritage Foundation’s 2024 Economic Freedom report, Nigeria ranks as a “mostly unfree” country. The report highlights how regulatory and institutional barriers restrict economic activities. It assesses countries across five levels of economic freedom indices. Nigeria ranks 125 in that report, placing it in the world’s bottom 30 percent. To achieve greater economic freedom, Nigeria must strengthen the rule of law to combat corruption, protect property rights, and foster market openness to attract investment and drive economic growth.
The heritage index highlights challenges in Nigeria’s property laws, like the Land Use Act. Restrictive provisions of the Act limit entrepreneurs’ ability to access credit using land as collateral. The Act also ranks low in terms of the rule of law. It further highlights issues of corruption in the system, which discourages potential investors and favours only a few individuals. These issues show how limited economic freedom directly harms daily life and development.
The Nigerian government must remedy corruption within its financial system through the rule of law. Corruption diminishes the rule of law, which a truly independent judiciary can be able to fix. Certain businesses manage to stifle competition by colluding with government officials who get kickbacks for their corrupt practices. The judiciary can prosecute corrupt public officials, but its financial dependence on the executive often limits the judiciary’s efficiency. The judiciary needs financial autonomy to be able to check illegal collaborations between public officials and private businesses. The judiciary’s independence would, in the long run, compel investors to compete on an equal-level playing field. For instance, Singapore ranks high in the rule of law and enjoys a corresponding level of economic freedom and growth.
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Nigeria cannot achieve full economic freedom if citizens do not exercise property rights that give them diverse investment opportunities. For instance, Nigeria’s Land Use Act gives state governors too much control. State governors exercise absolute discretion in land allocation and revocation. There is a need to amend the Land Use Act to curtail state governors’ powers and give citizens full ownership rights. For example, such an amendment should expunge the provision of the Act that denies citizens the right to challenge a governor’s decisions in court. This provision is oppressive and limits citizens’ guaranteed rights. The provision also stifles investment because investors cannot ascertain the protection of their property rights. Citizens with full ownership rights can use their lands to obtain loans, start businesses, and create wealth.
For example, Botswana provides a structured pathway for investors to secure long-term or permanent land rights through leaseholds of up to 99 years. This enables investors to plan for the long term and use land as collateral for financing, thereby supporting economic growth.
Also, market openness allows citizens to trade freely without restrictions. Nigeria faces a huge problem of food insecurity, with food inflation reaching 39 percent in December 2024. Nigeria’s lack of market openness prevents the importation of cheaper food items. For instance, Nigeria is projected to consume 4.4 million tonnes of wheat between 2024 and 2025 while producing only 120,000 tonnes. This gap in consumption and production provides investors with business opportunities. However, high tariffs hinder investors’ freedom to do business. Allowing free trade across borders, more so to benefit African investors, will attract investments and create jobs. For instance, the Busia One-Stop Border Post Project between Uganda and Kenya reduced customs processing time in Busia, Kenya, by 98 percent and that of Uganda by 69 percent, increasing ease of trade between both countries.
To foster sustainable development, the Nigerian government must prioritise policies that enhance economic freedom by strengthening the rule of law, ensuring transparency, and creating a more investor-friendly environment. These steps will attract investment and lay the foundation for long-term growth and prosperity.
Amadin Ogbewe is a writing fellow at African Liberty. He is on @amadinogbewe.
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