By Kachi Okezie, Esq
There is a question Nigeria has been reluctant to ask about its open economy: open to whom, and on what terms? The protests at Lagos International Trade Fair Complex in September were about more than foreign traders occupying market stalls. They exposed a deeper tension at the heart of Nigeria’s economic model: a country desperate for foreign capital is simultaneously allowing that capital to move ever closer to the very retail spaces that millions of Nigerians depend upon for their livelihoods. The protesters’ argument is not that foreign investment is inherently bad. It is that the rules of the game have changed.
For decades, Nigeria’s trading economy rested on an informal division of labour. International suppliers manufactured or exported goods in bulk. Nigerian traders travelled abroad, raised capital, navigated customs and ports, absorbed exchange-rate risks and built the distribution networks that brought those goods to consumers. That system was imperfect, but it created a domestic commercial class. Now the manufacturer, financier, logistics operator, wholesaler and retailer can increasingly be the same foreign-controlled enterprise. That is not simply more competition; it is a different market structure.
A Nigerian trader borrowing at punishing domestic interest rates cannot easily compete with a state-backed foreign operator that has direct access to the factory, cheaper financing and an integrated international supply chain. By the time the Nigerian trader buys the product, several layers of cost have already accumulated. The foreign competitor may easily control those layers. The result is a contest that looks free-market on paper while being profoundly unequal in practice. And this is where the law becomes important.
Nigeria’s investment regime was deliberately designed to be open. Section 17 of the Nigerian Investment Promotion Commission Act provides that, subject to the Act, a non-Nigerian may invest and participate in the operation of an enterprise in Nigeria. Section 18 then carves out the Negative List. That list is principally concerned with activities such as arms, narcotics and certain military-related production, rather than ordinary retail commerce. The legal message is therefore clear: foreign participation is the norm, while exclusion is the exception.
But there is nothing sacrosanct about leaving the framework untouched forever. Investment law is economic policy expressed through legislation. If the structure of the economy changes, the law can and should change with it. The question is not whether Nigeria should suddenly close its markets to foreigners. It should not. The question is whether the country has drawn sensible distinctions between productive foreign investment and foreign control of the final retail market.
A factory is not the same thing as a market stall. A manufacturing plant brings productive capacity, technology, skills and jobs. A major distribution centre can improve logistics and lower costs. But foreign ownership of the last retail link (the “last mile”) can displace precisely the small businesses that have historically absorbed economic shocks when formal employment fails.
In Nigeria, that function matters enormously. The informal and small-scale economy is not a peripheral feature of national life. It is one of the country’s principal employment and survival mechanisms. A joint survey by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) found that MSMEs account for 87.9% of total employment in Nigeria, contributing up to 50% of national GDP annually. When factories close or formal jobs disappear, people do not simply stop earning. They enter the market. Take away that market without creating alternative productive employment and the consequences will not remain commercial. They will become social.
Nor should policymakers assume that cheaper imports are an uncomplicated public good. Consumers benefit from lower prices, particularly during a cost-of-living crisis. But there is a point at which short-term consumer gains can undermine long-term productive capacity. An economy like Nigeria’s that becomes increasingly efficient at importing finished goods, while becoming less capable of producing or distributing them domestically, is not necessarily becoming more competitive. It may simply be becoming more dependent.
The competition-law dimension clearly deserves equal attention. The Federal Competition and Consumer Protection Act prohibits abuse of a dominant position and specifically addresses exclusionary conduct where its anti-competitive effects outweigh its efficiency gains. The FCCPC already has an Abuse of Dominance regulatory framework and has demonstrated that it is prepared to investigate conduct affecting competitive markets. This matters because some of the allegations emerging from the Lagos markets concern precisely the sort of vertical integration that competition law is designed to scrutinise at the very least.
Traders have alleged that customer information contained in shipping documents is being used to bypass domestic distributors and approach customers directly with factory-level prices. Such allegations must be investigated rather than assumed to be true. But if commercially obtained information is being exploited to eliminate competitors from the supply chain, the issue is no longer simply one of nationality; it becomes market conduct. Nigeria should regulate conduct, not scapegoat communities.
There is an equally important trade-law consideration. Distribution is recognised as a distinct services sector under the WTO’s General Agreement on Trade in Services. Governments retain regulatory space, but restrictions affecting foreign participation can engage questions of market access and national treatment depending on the commitments a country has undertaken. That means Nigeria cannot simply announce a sweeping foreign-retail ban and assume the matter ends there. The smarter approach is to design precise, transparent and proportionate rules.
Nigeria should consider a tiered system. Foreign capital should be welcomed and incentivised in manufacturing, assembly, technology, industrial logistics and large-scale distribution. But defined categories of micro-retail and traditional market commerce should be reserved for Nigerian enterprises, subject to careful legal drafting and consistency with Nigeria’s international obligations. Foreign manufacturers and distributors should be encouraged to supply registered Nigerian wholesalers and retailers. In designated traditional markets, direct foreign-owned retail operations could be subject to ownership, licensing or operational restrictions. The objective would not be to exclude foreign capital. It would be to push that capital upstream, towards the productive activities Nigeria most urgently needs.
There is another reason to prefer regulation over political confrontation: certainty. Investors can work with rules. What they cannot work with indefinitely is uncertainty: periodic crackdowns, arbitrary closures and shifting political demands that follow the elections cycle. A clear statutory framework, applied transparently, is better for foreign investors and Nigerian traders alike. The same principle should govern immigration compliance enforcement. Where foreign nationals work in Nigeria without the appropriate authorisation, the state should enforce its laws consistently. But enforcement should target unlawful conduct, not nationality. A legitimate foreign investor should have nothing to fear from a transparent regulatory regime.
And Nigeria must resist the most dangerous temptation of all: turning an economic argument into an ethnic one. Some of Lagos’s largest markets have long been associated with particular Nigerian communities. That history should not be allowed to distort policy. Nor should concern about foreign participation become a vehicle for xenophobia. The relevant question is not which ethnic group dominates a market. It is whether the market structure is serving Nigeria’s wider economic interests, since that Nigeria’s GDP calculation is not based on ethnicity but a single national productivity basket.
The choice before policymakers is therefore not between xenophobia and surrender. It is between strategic regulation and economic drift. Nigeria needs foreign capital. But it needs the right kind of foreign capital. It needs factories more than it needs foreign-owned stalls. It needs technology more than it needs another layer of import-dependent retail. It needs productive investment that creates jobs and domestic capacity, not merely investment that captures Nigerian consumer spending. The Lagos protests should be understood in that context. They are not an argument for shutting Nigeria’s doors. They are an argument for deciding what those doors should lead to.
An open economy does not require an open invitation to every layer of the value chain. A sovereign state is entitled to decide where foreign capital is most beneficial, provided it does so through lawful, transparent and defensible rules. Nigeria should therefore welcome foreign investors to build the factory, finance the warehouse, transfer technology and employ Nigerians. But it should think twice before allowing them to control every step between the factory gate and the Nigerian consumer. Because if the price of an open market is the disappearance of the domestic enterprise that makes that market work, then the market may be open; but the economy will be poorer for it.
-Okezie is a lawyer, chartered mediator and management consultant
