Culture, Trust and Investment in Nigeria

What electoral concessions reveal about institutions and business expectations

By Adesoji Adesugba

My friend Justin recently sent me a message while following election results in the United States: “Following US election results. Incredible that contestants concede even before all votes are counted. What happened to Nigeria?”

It was a brief message with implications far beyond elections. It raised a question about how societies work, how we judge them, and why people entering an unfamiliar environment are sometimes disappointed by what they find. For anyone concerned with investment and economic development, that question deserves careful attention.

My immediate response was to think about cultural orientation. We often expect another society to behave like the one whose practices we admire, without sufficiently examining the history and conditions that sustain those practices. When the expected behaviour fails to appear, disappointment can harden into condemnation.

Yet culture alone cannot carry the explanation. Electoral behaviour and business conduct emerge from the interaction of social expectations, institutions and incentives. Understanding that interaction helps us avoid misjudging Nigeria. It also gives us a more useful basis for improving it.

Consider first what an early concession actually means. In the United States, election-night results are unofficial. Counting continues, officials reconcile records, and results pass through certification procedures. A concession does not bring this work to an end. The California Secretary of State explicitly distinguishes candidates’ concessions from the completion of the official count.

A candidate may acknowledge defeat because the outstanding ballots offer no realistic route to victory. The Associated Press explains that its own race calls depend on determining when trailing candidates no longer have a path to winning. Campaigns make their own assessments. An early concession can therefore reflect confidence in the available evidence, rather than indifference to uncounted votes.

The important issue is the credibility of the information and the process producing it. Where candidates can inspect reliable results and believe that remaining procedures will be followed, accepting an evident defeat becomes easier. Where records are inaccessible or procedures disputed, the same request to concede may be received very differently. My argument is that the conditions surrounding the gesture help explain the gesture itself.

America’s own history cautions against treating concession as an automatic expression of national character. The disputed Florida count in 2000 generated extensive litigation. In 2020, Donald Trump refused to accept the lawful election outcome, as documented in the congressional investigation of the events surrounding 6 January 2021. These episodes show that established democratic conventions remain vulnerable to political choices.

Nigeria supplies an equally important counterexample to the suggestion that gracious acceptance belongs elsewhere. On 31 March 2015, President Goodluck Jonathan congratulated Muhammadu Buhari and conceded before INEC had officially announced the winner. The International Republican Institute recorded the concession and its contribution to a relatively peaceful aftermath. Nigeria’s first transfer of presidential power between opposing elected parties followed.

Jonathan acted within Nigerian society. His decision matters because it demonstrates that leadership can strengthen a democratic convention even where institutional trust is incomplete. History influences behaviour, but leaders also make history. Neither America nor Nigeria can be adequately described by a single electoral moment.

The economist Douglass North offers a useful framework. In his influential work on institutions, he distinguished formal rules, such as laws and property rights, from informal constraints, including customs and codes of conduct. Both shape expectations and the costs of conducting transactions. A constitution or commercial statute operates within a wider environment of enforcement and socially understood behaviour.

Culture matters within that environment. Luigi Guiso, Paola Sapienza and Luigi Zingales, in their research on culture and economic outcomes, examined how cultural explanations can be made testable, including in relation to entrepreneurship and saving. Their approach encourages precision. Invoking “culture” becomes useful when we identify a particular belief or expectation and explain how it affects a particular decision.

We lose that precision when we speak as though every Nigerian shares one orientation, every Westerner approaches business identically, or every member of a diaspora possesses the same commercial skills. Nigeria contains substantial differences across communities, generations, professions and organisations. A family trading enterprise and a regulated financial institution may operate with very different internal expectations, even within the same city.

Historical experience also deserves attention. Nigeria’s present democratic order followed the end of military rule in 1999, after repeated interruptions to civilian government. Those interruptions form part of the background against which public institutions and political expectations have developed. They help explain why confidence cannot simply be assumed because a democratic procedure has been written into law.

Afrobarometer’s June–July 2024 survey of 1,600 Nigerian adults illustrates the distinction between support for a principle and confidence in an institution. Some 73.8% favoured choosing leaders through regular, open and honest elections. However, only 16.3% said they trusted INEC “somewhat” or “a lot”, combining the two positive response categories. These are survey perceptions, rather than a legal finding about an election, but the gap is instructive.

The European Union’s observation mission identified concrete problems in the 2023 elections, including shortcomings in electoral administration and transparency that damaged trust. Its final recommendations addressed matters such as legal ambiguity, access to results and accountability. Whatever one’s political preference, those findings direct attention towards procedures that can be examined and improved.

It is therefore insufficient to ask candidates to imitate the appearance of democratic confidence. Citizens need reasons to believe that the count is accurate and that complaints will receive a fair hearing. Candidates also carry a responsibility to recognise credible defeat and to avoid manufacturing suspicion for political advantage. Institutional weakness cannot excuse every refusal to concede, just as a demand for concession cannot settle every legitimate dispute.

The stakes attached to public office require scrutiny too. Richard Joseph’s work on Nigerian politics examines the treatment of office as a source of resources for officeholders and their networks. Where political access becomes closely connected to economic opportunity, defeat threatens more than an individual ambition. It can threaten the expectations of a much wider circle of dependants and supporters.

That analysis suggests a practical route towards less desperate competition: make livelihoods, public services and lawful business opportunities less dependent on political allegiance. People should be able to lose an election while retaining their rights and their prospects. Such arrangements help make acceptance of defeat more credible and less personally catastrophic.

A further distinction is essential. What people do under pressure does not always reveal what they approve of. Research by Leena Koni Hoffmann and Raj Navanit Patel for Chatham House found that respondents frequently underestimated how strongly fellow citizens disapproved of corruption. Some harmful practices persist partly because people expect others to participate, or believe that acting differently will leave them at a disadvantage.

Nigeria’s National Bureau of Statistics and the United Nations Office on Drugs and Crime provide evidence against treating corruption as an accepted national value. Their report published in July 2024 found that 70% of Nigerians asked for a bribe in 2023 refused on at least one occasion. Refusing once does not establish that someone never paid on another occasion. Nevertheless, the finding reveals substantial resistance within Nigerian society itself.

This is where Justin’s electoral observation connects with investment. Both voters and investors must decide how much confidence to place in rules they cannot personally enforce. A voter asks whether a ballot will be counted honestly. An investor asks whether an approval will remain valid and whether a commercial obligation will be honoured. In both cases, experience shapes the answer.

A concession speech does not automatically attract investment, and countries with very different political systems attract capital. The connection I am drawing concerns the reliability of institutions. When people expect rules to be applied consistently, they can plan with greater confidence. When outcomes depend heavily on unpredictable discretion, they must spend more effort protecting themselves against uncertainty.

For a business, that protection can mean additional working capital, alternative suppliers, backup infrastructure or a more cautious expansion plan. Cultural understanding can help managers identify the risks accurately. It cannot make every underlying cost disappear. The World Bank’s assessment of Nigeria identifies electricity, transport and logistics gaps as continuing constraints on productivity, alongside weaknesses in state capacity and insecurity.

An investor is justified in expecting honest administration and enforceable agreements. Such expectations should be shared by Nigerians. The mistake arises when an investor assumes that the route to those outcomes will reproduce familiar procedures, relationships and institutional capacities without first studying the host environment. Ethical standards and assumptions about operating conditions are different things.

An illustrative example is a proposed factory. A convincing national market forecast does not establish that a particular site has dependable power, suitable transport access or an uncomplicated land title. A meeting with a senior official does not answer every regulatory question. Understanding how federal, state and local responsibilities intersect is part of assessing whether the project can operate as intended.

The same care applies to relationships. In some settings, introductions, repeated meetings and evidence of personal reliability help parties decide whether they can work together. An investor who dismisses that process as wasted time may overlook how trust is established. Equally, a good introduction cannot replace independent verification of a partner’s finances, authority or legal rights.

My original reflection to Justine drew attention to Lebanese, Indian and Chinese business communities. Their substantial presence in Nigeria makes them useful subjects for study. The explanation, however, needs to identify what particular enterprises have learned and built. Nationality itself tells us little about the quality of an investment decision.

Research on Lebanese enterprise is especially relevant to the importance of accumulated knowledge. Charles Mambula’s study of Lebanese migrant entrepreneurs in Nigeria examined their ability to adapt under constraints. Research published by the Middle East Institute also describes how Lebanese-Nigerian family and commercial networks provided information and practical support. An established network gives a new entrant resources that a newcomer arriving alone may lack.

The Indian commercial presence is substantial too. India’s High Commission in Abuja reports more than 200 companies in Nigeria owned or operated by Indians or people of Indian origin, and estimates investment by Indian companies at around US$27 billion. These are the High Commission’s estimates, rather than a comparable measure of investment performance across nationalities. They nevertheless indicate the scale of a sustained business relationship.

Chinese experience provides a particularly useful example of adaptation through local partnership. In research published by the Carnegie Endowment in 2022, Abdoulkadre Ado examined joint ventures in West Africa, including the Lekki Free Zone Development Company in Nigeria. His fieldwork described the contribution of Nigerian managers who understood local employees’ cultural expectations and helped the venture adjust its management practices.

Here, Nigerian knowledge was an active contribution to the enterprise. It helped shape how the business operated. This deserves emphasis because accounts of foreign investment sometimes leave local partners and employees in the background, even when their knowledge is central to making an operation workable.

The evidence also resists an uncomplicated story of foreign commercial success. Allen Hai Xiao’s research on small Chinese entrepreneurs in Nigeria documented vulnerability to policy changes and corruption, as well as limited solidarity among compatriots. Chinese enterprises differ from one another, and a large joint venture has resources and relationships that a small trader may not possess.

Western businesses also have long experience in Nigeria. Nigerian Breweries, incorporated in 1946 and a subsidiary of the Netherlands-based Heineken, provides a clear counterexample to any claim that Western investors cannot establish a lasting presence. Its history does not establish that every investment succeeds. It does make nationality a poor explanation on its own.

A fair comparison would examine successful and unsuccessful firms, their sectors, capital, management and time in the market. We should also ask whether they benefited from advantages unavailable to other entrants. Studying only the companies that remain visible risks overlooking those that closed or withdrew. The transferable lesson concerns the capabilities firms develop, rather than the passports their owners hold.

Those capabilities can be developed deliberately. Investors should give Nigerian managers meaningful authority to explain local realities and influence decisions. Headquarters needs to distinguish a manager’s well-supported assessment from an inconvenient answer it would prefer not to hear. Local expertise becomes useful when it can change a plan.

Community relations deserve similar seriousness. For a project that affects land, employment or livelihoods, early engagement should establish who will be affected, what concerns exist and which commitments the company can fulfil. Consultation conducted only after conflict begins is likely to be more difficult. Careful records and clear responsibilities help turn goodwill into dependable working arrangements.

Investors should also plan for the actual operating environment. That means testing assumptions about delivery times, payment cycles and infrastructure, and considering how changes in exchange rates or policy would affect the business. A Nigerian partner cannot eliminate these risks merely by being Nigerian. Experience should inform the assessment, and evidence should support it.

There must be an equally clear boundary around adaptation. Nigerian law prohibits corrupt gratification. For businesses subject to the United States Foreign Corrupt Practices Act, the SEC also explains that local custom does not constitute the Act’s written-local-law defence. Describing an improper payment as a familiar business practice does not resolve its legal or ethical consequences.

Understanding local realities should help an investor find lawful ways to operate, document obstacles and seek remedies. It should strengthen respect for employees, customers and communities. Advice that reduces knowledge of Nigeria to knowing whom to pay impoverishes the country and misrepresents the many Nigerians working to improve its institutions.

The obligation to understand Nigeria must also be matched by Nigeria’s obligation to make itself easier to understand. A country seeking investment should publish requirements clearly, coordinate its agencies and provide reliable channels for resolving problems. Investors should not need privileged access to discover a legitimate procedure or obtain a service to which they are entitled.

The Nigerian Investment Promotion Commission’s One Stop Investment Centre offers a relevant institutional model: bringing agencies together to coordinate business entry and regulatory services. Its effectiveness should be assessed through investors’ actual experience, including clarity of requirements and the resolution of problems. The purpose of facilitation is to reduce uncertainty in the system.

Chambers of commerce, professional bodies and investment advisers can contribute by explaining sector requirements, providing practical orientation and identifying recurring administrative obstacles. Their work should make verified knowledge more widely available. Small Nigerian enterprises need that access just as much as foreign investors do, and often have fewer resources to absorb delays.

There is a wider development issue here. A system that can be navigated successfully by a few experienced insiders may still deter many productive enterprises. We should learn from the businesses that have adapted, then use that knowledge to improve conditions for others. Their resilience is valuable evidence about what works and where the costs remain excessive.

The electoral parallel returns at this point. Confidence grows when procedures withstand scrutiny and ordinary participants can understand how decisions were reached. In business, published requirements and consistent treatment serve a similar purpose. Both reduce the need to rely on personal assurances where an institution should provide an answer.

Leadership remains indispensable. Political leaders influence expectations when they accept credible defeat. Public officials do so when they apply requirements fairly. Business leaders do so when they honour commitments despite an opportunity to evade them. Repeated conduct of this kind gives people grounds to revise their expectations of what others will do.

I would therefore answer Justin with both understanding and ambition. Nigeria’s history and institutional experience help explain why a behaviour observed elsewhere cannot simply be assumed here. We should examine the conditions that make that behaviour possible, including the conditions Nigeria itself achieved in 2015, and work to strengthen them.

Investors face a corresponding task. They need to study Nigeria closely enough to distinguish a cultural misunderstanding from a genuine commercial obstacle, and a workable local practice from an unacceptable demand. Nigerian institutions, in turn, need to make honest enterprise more predictable and less dependent on exceptional ingenuity.

Justin’s question began with candidates conceding before the final ballot was counted. It leads us to a larger national task: building institutions that people can trust even when the immediate outcome disappoints them. That is the confidence a democracy requires, and it is also the confidence on which lasting investment can be built.

Professor Adesoji Adesugba, DBA, Ed.D is an investment promotion and economic development expert and public policy analyst. He lectures at Yakubu Gowon University, Abuja, and serves as the First Deputy President of the Abuja Chamber of Commerce and Industry. He writes from Abuja.