Ondo State Launches Investment Drive to Diversify Economy Beyond Oil Dependence
Nigeria's Ondo State has initiated a strategic economic repositioning program targeting international capital, seeking to leverage natural resources and infrastructure improvements to attract foreign direct investment amid national fiscal pressures.
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Ondo State government has unveiled a comprehensive investment attraction strategy aimed at diversifying its economic base and reducing dependence on federal oil revenue allocations, according to announcements from state officials this week. The southwestern Nigerian state is positioning itself as an alternative investment destination as the country grapples with currency volatility and inflationary pressures that reached 34.8% year-on-year in December 2025.
The initiative comes as sub-national governments across Nigeria intensify efforts to generate internally generated revenue (IGR) following persistent shortfalls in federal allocations. According to the National Bureau of Statistics, states' share of federation account revenue declined 12.3% quarter-on-quarter in Q4 2025, forcing regional administrations to seek alternative funding sources. Ondo State, which contributed approximately ₦38.2 billion in IGR during fiscal year 2024-2025, aims to double this figure within three years through targeted sectoral investments.
"Ondo State is charting a new economic future by creating an enabling environment for both domestic and international investors," state officials indicated in materials released to potential investors, as reported by Pulse Nigeria. The state's investment pitch emphasizes untapped mineral resources, agricultural potential, and coastal access for maritime trade. Ondo ranks among Nigeria's top bitumen reserve holders globally, with an estimated 42.47 billion tonnes of deposits remaining largely unexploited due to infrastructure deficits and capital constraints.
The state's economic repositioning strategy targets five priority sectors: agribusiness, solid minerals extraction, renewable energy, tourism, and light manufacturing. Officials have committed to streamlining business registration processes and offering tax incentives for pioneer industries, mirroring successful models implemented in Lagos and Rivers states. The Central Bank of Nigeria's decision to maintain the monetary policy rate at 27.5% in January 2026, while aimed at controlling inflation, has increased borrowing costs for state governments seeking development finance, making foreign direct investment increasingly critical.
Infrastructure development forms the cornerstone of Ondo's investment appeal. The state is leveraging its 180-kilometer coastline and the Ondo Deep Seaport project, which received federal approval for public-private partnership development in 2024. When completed, the port facility is projected to handle 300,000 twenty-foot equivalent units annually, potentially generating ₦15 billion in annual port-related revenues. Transportation connectivity improvements include the ongoing rehabilitation of the Akure-Owo-Benin expressway and expansion of Akure Airport to accommodate larger cargo aircraft.
Agricultural transformation represents another focal point, with Ondo producing approximately 30% of Nigeria's cocoa output—the nation's second-largest export commodity after crude oil. State authorities are promoting contract farming arrangements and processing facilities to capture higher value-addition margins. The African Development Bank has identified Nigeria's agricultural value chain financing gap at $10 billion annually, presenting opportunities for private equity and development finance institutions. Pulse Nigeria reported that state officials are actively engaging with multilateral lenders and sovereign wealth funds to structure bankable projects across these sectors.
Market analysts note that sub-national investment drives face headwinds from Nigeria's challenging macroeconomic environment. The naira depreciated 43% against the US dollar in 2025, closing at ₦1,547/$1 on the Nigerian Autonomous Foreign Exchange Market in December. Currency instability complicates project financing and return calculations for foreign investors. Additionally, security concerns in certain regions and regulatory unpredictability at the federal level continue to dampen investor sentiment, with Nigeria ranking 131st of 190 economies in the World Bank's 2025 Ease of Doing Business Index.
Nonetheless, Ondo's proactive approach aligns with broader trends across West Africa, where regional governments are asserting greater economic autonomy. The state has established an investment promotion agency tasked with investor facilitation and aftercare services, while developing a digital platform for project tracking and regulatory approvals. Success will likely depend on execution capability, political stability through the 2027 election cycle, and the state's ability to de-risk investments through guarantees and insurance mechanisms. Regional peers including Ogun and Ekiti states are pursuing similar strategies, creating competitive pressure to deliver tangible improvements in the business operating environment.