Nigeria’s economic future will not be secured in Abuja alone. It lies in the capacity of states to compete, innovate, and attract investment by leveraging their strengths. Subnational competitiveness, driven by healthy rivalry, is the missing link to sustainable and inclusive development.
The world has become a global village – politically, economically, and socially. In this interconnected environment, competitiveness is no longer optional; it is an imperative. For countries like Nigeria to achieve sustainable and inclusive development, they must position themselves to trade goods and services at rewarding prices, while attracting and retaining quality investments.
Global industrial strategy has shifted, with private sector capital now the dominant driver of growth. Governments are expected to set predictable governance frameworks that attract, channel, and regulate capital flows. While multilateral organisations, such as the Bretton Woods institutions, provide global guidelines, it is ultimately the responsibility of national and subnational governments to craft frameworks that unlock their competitive potential.
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Subnational Competitiveness: The Missing Link
Nigeria’s federal system, in principle, gives states the room to shape their own economic destinies within a national framework. Yet, the reality is sobering. Central Bank of Nigeria (CBN) data on capital inflows show that several states have recorded little to no new investment for years. Even if the methodology is debated, the underlying message is clear: too many states have grown complacent and are failing to build competitiveness. This gap mirrors national economic underperformance and exposes a lack of strategic action at the subnational level.
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Every Nigerian state holds unique competitive advantages, whether in agriculture, solid minerals, manufacturing, creative industries, or tourism. But these remain untapped when governments fail to create an enabling environment for private sector growth. Rather than waiting for federal allocations, states must become proactive, and target sectors where they hold comparative advantages and build ecosystems that attract long-term capital.
Opportunities abound. Reviving the cotton industry in the North could complement garment-making in the South, reducing reliance on imported fabrics at a time when Nigeria-styled garments are gaining global demand. Similarly, developing infrastructure for modern cattle ranching, coupled with cold chain facilities at train stations, would cut farm-to-table wastage and strengthen agricultural value chains. These examples show how states can align their comparative advantages with national priorities for shared growth.
Lessons Across Developed and Developing States
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Examples from around the world show that healthy subnational rivalry drives innovation and growth. In the United States, states have long competed to host major investments. A notable case was in 1993, when Alabama won the bid for a Mercedes Benz plant with a $253 million incentive package, edging out other contenders. That single deal transformed Alabama into an automotive hub, later attracting Hyundai, Honda, and Toyota.
…Nigerian states must take ownership of their competitiveness. Healthy rivalry is the pathway to breaking dependence on federal allocations, widening wealth creation, reducing regional disparities, and accelerating inclusive growth. Ogun State illustrates this potential. Strategically positioned next to Lagos, it has refused to wait on providence; instead, it has deliberately pursued investors…
India provides another compelling example. Gujarat, Maharashtra, and Tamil Nadu have consistently competed to attract FDI in automobiles, pharmaceuticals, and IT. Gujarat leveraged its Vibrant Gujarat Summits to draw billions in investment commitments, while Tamil Nadu capitalised on its skilled workforce and ports to become a hub for cars and electronics. These rivalries demonstrate how competition within a federal structure creates national gains.
This is the kind of competition that Nigeria urgently needs. The First Republic showed what is possible: many achievements were driven by the rivalry between the Northern and Western Regions. Sadly, that spirit has been lost. When Toyota considered an assembly plant in West Africa, Nigeria left the contest to the Federal Government alone. With no state involvement, the deal slipped away. Toyota chose Ghana, boosting its industrial base and creating socioeconomic growth, while Nigeria was left behind.
Promoting Healthy Rivalry
The lesson is unmistakable: Nigerian states must take ownership of their competitiveness. Healthy rivalry is the pathway to breaking dependence on federal allocations, widening wealth creation, reducing regional disparities, and accelerating inclusive growth. Ogun State illustrates this potential. Strategically positioned next to Lagos, it has refused to wait on providence; instead, it has deliberately pursued investors by:
- Expanding and rehabilitating road networks to lower transport costs;
- Establishing industrial clusters and agro-processing zones;
- Streamlining ease-of-doing-business systems, including one-stop shops and digital tax platforms;
- Partnering with federal agencies and financiers to strengthen industrial power supply.
These efforts have positioned Ogun as a credible alternative to Lagos. Yet, competition must remain economic, not political. Investors value infrastructure, skilled labour, and predictable policies; not wasteful incentives or publicity stunts. While Ogun’s progress is commendable, true competitiveness extends beyond physical infrastructure; it requires deliberate investment in education and technical upskilling to secure long-term growth.
The frenzy to host investment summits has increasingly become political theatre, rather than genuine economic engagement. To deliver real value, these platforms must be retooled into arenas for reforms, partnerships, and long-term commitments. They expose the enduring ideology of Nigeria’s political class: ‘sharing the national cake’ or chasing cheap publicity under the guise of economic discourse. Yet, when political debates arise, the cry for state autonomy dominates the air, with little or no effort towards translating this into meaningful subnational development. This ideological conflict undermines the political will of states to pursue true economic independence through competitiveness and innovation.
The CBN’s capital inflow data is a warning sign, but also an opportunity. It challenges state leaders to abandon complacency and embrace competitiveness. Nigeria cannot continue to demand autonomy in politics while clinging to dependence in economics. Real autonomy will come when states build prosperity through competition, innovation, and resilience.
Building Coherence and Synergy
For subnational competitiveness to thrive, coherence across government tiers is essential. The Federal Government’s industrial plan, anchored on private sector growth, offers a national roadmap. States must align with it, while tailoring strategies to local realities. Such alignment creates synergy, prevents duplication, and markets Nigeria as a federation of viable investment hubs.
The pursuit of Internally Generated Revenue (IGR) has too often crowded out genuine investment. Instead of enabling growth, many states impose layers of taxes and rent-seeking practices that suffocate industries. Global best practice points in the opposite direction: support private enterprises, simplify engagement, and build trust. Nigeria must move in that direction, and the new tax regime under the Nigeria Tax Act 2025 should serve as a benchmark for greater coherence and synergy.
States must therefore build credible institutions, strengthen governance, and ensure transparency in investor relations. The era of ad-hoc policies, political showmanship, uncertainty, and hostile actions toward private capital must end. What is needed are predictable frameworks that inspire investor confidence, encourage peer review, and trigger healthy competition. Nigeria once had such a spirit during the First Republic; it is time to reactivate it.
Conclusion
Nigeria’s economic future will not be secured in Abuja alone. It lies in the capacity of states to compete, innovate, and attract investment by leveraging their strengths. Subnational competitiveness, driven by healthy rivalry, is the missing link to sustainable and inclusive development.
The CBN’s capital inflow data is a warning sign, but also an opportunity. It challenges state leaders to abandon complacency and embrace competitiveness. Nigeria cannot continue to demand autonomy in politics while clinging to dependence in economics. Real autonomy will come when states build prosperity through competition, innovation, and resilience.
Dipo Baruwa is a business climate development analyst.
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