- Security, regulatory enforcement lag
Nigeria’s 120th position in the 2026 World Justice Project Rule of Law Index exposes institutional weaknesses that could undermine investor confidence, raise operating costs and constrain private-sector growth, despite the country’s drive to attract investment and expand productive capacity.
Nigeria’s efforts to reposition its economy for investment-led growth face a challenge that extends beyond inflation, foreign exchange instability, high borrowing costs and inadequate infrastructure: the strength and credibility of the institutions responsible for enforcing the law.
The 2026 Rule of Law Index released by the World Justice Project (WJP) places Nigeria 120th out of 143 countries, with an overall score of 0.40, reflecting a marginal deterioration in its rule of law performance. The country also ranks 24th among 34 countries in sub-Saharan Africa, down from 23rd in the previous edition.
While the overall ranking provides an indication of Nigeria’s institutional standing globally, a closer examination of the eight factors measured by the index reveals weaknesses with direct implications for the business environment, particularly in security, regulatory enforcement and corruption.
Nigeria ranks 142nd globally in Order and Security, 122nd in Regulatory Enforcement and 118th in Absence of Corruption. These indicators go beyond conventional governance assessments, touching on the conditions that determine how businesses protect their assets, enforce contracts, navigate public institutions and manage commercial risks.
For an economy seeking to attract long-term capital, expand domestic production and strengthen private-sector participation, these institutional shortcomings carry considerable economic significance.
Security remains a major business constraint
Nigeria’s 142nd position out of 143 countries in Order and Security is among the most troubling findings of the index. The country also ranks last among the 34 sub-Saharan African countries assessed under this factor, recording a score of 0.32.
Security is a fundamental requirement for productive economic activity. Businesses depend on the safety of their employees, facilities, inventories and transportation networks to maintain operations and deliver goods and services.
Where insecurity persists, companies may face additional expenditure on security, insurance, transportation and logistics, while disruptions to supply chains can affect production schedules, distribution and profitability.
The implications cut across manufacturing, agriculture, retail, construction and logistics, where the movement of people, raw materials and finished products is essential to business continuity.
For manufacturers, insecurity can complicate access to agricultural inputs and industrial raw materials. For farmers and agribusiness operators, it can disrupt access to farmland and markets. For logistics companies, it can increase the risks and costs associated with moving goods across the country.
Although the WJP index does not quantify the financial losses businesses incur from insecurity, Nigeria’s ranking highlights the scale of the security challenge within the institutional environment in which enterprises operate.
The economic consequences are not limited to businesses already operating in affected areas. Investors considering new projects must also factor security risks into decisions on location, capital expenditure, insurance and expected returns.
Regulatory uncertainty and cost of doing business
Nigeria’s 122nd global position in Regulatory Enforcement, with a score of 0.41, presents another concern for businesses.
A functioning regulatory system is essential to a competitive economy. It establishes the rules governing commercial transactions, protects consumers, provides certainty for investors and creates a framework for fair competition.
The problem arises when regulations are inconsistently implemented, enforcement is unpredictable or businesses cannot confidently anticipate how administrative decisions will be made.
Such uncertainty can increase compliance costs, delay investment approvals and complicate long-term business planning. It can also create opportunities for discretionary practices that place businesses with fewer financial and institutional resources at a disadvantage.
For small and medium-sized enterprises, which often have limited capacity to navigate complex administrative procedures, inconsistent regulatory enforcement can become an additional barrier to expansion.
The implications are particularly relevant as Nigeria seeks to attract investment into manufacturing, energy, infrastructure, agriculture and other productive sectors. Investors in these industries typically make substantial capital commitments and require confidence that the regulatory framework governing their operations will remain transparent and reasonably predictable.
The WJP findings therefore raise questions about the extent to which Nigeria’s institutional environment supports the investment certainty required to translate economic opportunities into productive capital formation.
Corruption and erosion of market confidence
The country’s ranking of 118th globally in Absence of Corruption, with a score of 0.33, further illustrates the institutional challenges confronting the private sector.
Corruption can distort the allocation of economic opportunities by weakening competition and creating advantages for businesses based on connections or improper payments rather than efficiency, innovation and productivity.
In public procurement, licensing, taxation and regulatory administration, the perception that decisions may be influenced by considerations outside established rules can undermine confidence in the fairness of the business environment.
For investors, this introduces uncertainty into the cost of doing business. Companies may have to devote additional resources to compliance, due diligence and risk management, while businesses that operate transparently may face difficulties competing in environments where rules are not applied consistently.
The longer-term economic implications include weaker competition, inefficient allocation of resources and reduced incentives for entrepreneurship and innovation.
Addressing corruption is therefore not simply an administrative or political priority. It is also important to improving market efficiency and ensuring that businesses compete on the basis of productivity and commercial performance.
Judicial independence and protection of investment
Another important dimension of the WJP findings concerns the relationship between government powers and judicial oversight.
Nigeria ranks 94th globally in Constraints on Government Powers, with a score of 0.47. Although its regional position is 13th among 34 countries, the WJP reports that the country’s performance deteriorated in the sub-factor measuring the extent to which government powers are limited by the judiciary.
This is significant because the judiciary plays an important role in protecting commercial rights, enforcing contractual obligations and providing remedies where businesses believe that their rights have been violated.
Investors require assurance that agreements will be respected, property rights protected and disputes resolved through institutions that operate independently and impartially.
Where judicial oversight is weakened, questions can arise about the ability of businesses to obtain effective remedies against arbitrary administrative decisions or breaches of contractual obligations.
The economic importance of an independent judiciary extends beyond the courtroom. Confidence in dispute resolution helps businesses assess risks, negotiate commercial relationships and make long-term investment commitments.
Nigeria’s performance in Civil Justice, where it ranks 103rd globally with a score of 0.44, also highlights the need to improve access to affordable, timely and effective dispute resolution.
For businesses, prolonged litigation and expensive dispute settlement processes can tie down capital, disrupt commercial relationships and increase the cost of enforcing agreements.
In an economy where access to affordable finance remains a challenge, delays in recovering debts or resolving contractual disputes can further constrain working capital and business expansion.
Mixed picture on governance and human rights
The report presents a more nuanced picture of Nigeria’s institutional performance than a blanket assessment of democratic and governance decline would suggest.
Although the WJP identifies a global trend towards shrinking civic space and weakening institutional checks and balances, it reports that Nigeria did not experience a decline in freedom of opinion and expression, freedom of assembly and association, or civic participation in the latest assessment.
However, the country ranks 111th globally in Fundamental Rights and 101st in Open Government, indicating that broader institutional challenges remain.
The WJP’s global findings are nevertheless significant. More than 86 per cent of countries assessed have experienced a sustained five-year decline in at least one of three safeguards against authoritarian rule: constraints on government powers, open government or fundamental rights.
The organisation also reports that judicial constraints on government powers weakened in 63 per cent of countries.
For Nigeria, the concern is that the reported weakening of judicial oversight occurs within an institutional environment where businesses and citizens depend on effective checks and balances to protect their rights and hold public institutions accountable.
The economic case for stronger institutions
Perhaps the most important implication of the report for Nigeria’s economic policy direction is its identification of a relationship between stronger rule of law and more favourable economic outcomes.
According to the WJP, countries with GDP per capita above the global average of $14,406 recorded Rule of Law Index scores of at least 0.68. Countries with inflation below the global median of 3.23 per cent had index scores of 0.60 or higher, while countries with investment-grade sovereign credit ratings recorded scores of at least 0.66.
These findings demonstrate an association between institutional quality and economic performance, although they do not establish that stronger rule of law alone causes higher income, lower inflation or improved sovereign credit ratings.
The relationship is important for Nigeria, where economic policymakers are pursuing reforms aimed at stabilising the macroeconomic environment, improving investor confidence and expanding productive capacity.
Macroeconomic reforms can help address inflation, exchange-rate pressures and fiscal imbalances. However, investors also assess the institutions responsible for implementing policies, enforcing regulations and protecting commercial rights.
Improvements in macroeconomic stability may therefore be insufficient to secure sustainable investment if businesses remain uncertain about the consistency of regulatory decisions, the protection of property and the enforcement of contracts.
In this sense, the rule of law is an important component of the economic infrastructure required to translate policy reforms into lasting improvements in investment and productivity.
Nigeria has competitiveness challenge in Africa
Nigeria’s regional performance further illustrates the scale of the challenge.
Rwanda leads sub-Saharan Africa in the 2026 index, ranking 40th globally, followed by Namibia and Mauritius. Nigeria, at 24th regionally, is positioned behind a number of African economies in the WJP assessment.
The comparison is relevant as African countries compete for investment in manufacturing, infrastructure, energy, agriculture and services.
Nigeria retains significant attractions for investors, including its large consumer market, entrepreneurial base and economic potential. However, market size alone does not eliminate the institutional risks associated with operating in an uncertain business environment.
Investors assessing different African markets consider not only demand and expected returns but also security, regulatory consistency, contract enforcement, property rights and the reliability of public institutions.
These considerations are especially important for capital-intensive investments, where projects require substantial upfront expenditure and long periods to recover costs.
The WJP also reports that 23 of the 34 Sub-Saharan African countries assessed experienced a decline in their rule of law scores in the latest year, including Nigeria. Of these, 20 had also recorded declines in the preceding year.
This suggests that the institutional challenge is not confined to Nigeria, but the country’s position highlights the need to strengthen the foundations of its business environment if it is to improve its competitiveness.
Beyond economic stabilisation
Nigeria’s 2026 performance in the Rule of Law Index raises a broader question about the sustainability of its economic reform agenda.
The country ranks 87th globally in Criminal Justice, with a score of 0.39, representing its comparatively strongest global ranking among the eight factors measured. However, the broader pattern of results points to the need for improvements across the institutions responsible for maintaining security, enforcing regulations, combating corruption and administering justice.
Strengthening these institutions requires more than policy declarations. It involves improving judicial independence, accelerating dispute resolution, ensuring consistent regulatory enforcement, strengthening accountability in public administration and improving the capacity of security institutions.
It also requires greater transparency in government decision-making and a more predictable framework for the exercise of public authority.
For businesses, the value of institutional reform is ultimately measured by practical outcomes: the ability to operate without arbitrary interference, move goods safely, obtain regulatory approvals transparently, protect commercial assets and enforce agreements without excessive delays or costs.
The WJP’s findings suggest that Nigeria’s economic competitiveness cannot be assessed solely through its market size, investment incentives or macroeconomic indicators. The credibility of the institutions that govern commercial activity is equally important.
As the government seeks to attract capital, stimulate domestic production and position Nigeria as a more competitive investment destination, strengthening the rule of law will be central to creating the certainty businesses need to invest, expand and generate sustainable economic value.
