ABSTRACT
The research work became
necessary because of the huge sum experided as well as the incentive avarible
to foreign investors and yet we have not experienced the much needed to influx
of FDI.
FDI being the catalyst for
industrial and economic development is needed to develop every fact of the
Nigeria n policy. Moreover, the tenets of traditional economic theory stated
that capital moves from developed economy to under-developed economy where
labour is cheap and abundant un-tapped resources. This work seeks to find out
why FDI remain low in Nigeria and hence prefer solution. The review of related
literature was carried out with emphasis on Nigeria incentives towards attracting
FDI and the determinants of FDI; which include market size, openness, political
risk etc.
Research Methodology was used
which highlighted the approach to the solving of the problems, methods of data
collections, research instruments and sources of data. The data collected
through questionnaire administration were code into Data Analysis Sheet using
liker scale-weight and label. The analysis was carried out using measure of
effectiveness. The result arrived at was tested by 5% significance test before its
acceptance.
Finally, based on the findings
in literature review, interviews and questionnaire, the last chapter focused on
summary of these findings, conclusion and recommendations on how to attract FDI
in Nigeria.
CHAPTER ONE
1.0 INTRODUCTION
The traditional economic theory teaches that capital starved,
but generally labour surplus developing countries, should be the net importers
of financial resources from advanced countries. This pattern o movement will be
informed by the returns on new investment opportunities, which are considered
higher where capital is limited (Oyeranti 2003:10). Flows of funds in the
opposite direction from individuals and business organizations are considered
perverse and exceptionable.
Financial resources enter into a country through any of the
followings:
- Foreign direct investment, official flows from bilateral
sources (eg. OPEC, Organisation for Economic Co-operation and Development-OECD)
and multilateral sources (such as the World Bank, International Development
Association-IDA, International Monetary Fund-IMF, International Financial
Corporation-IFC) on concessional and non-concessional terms.
All of these come in form of investment, loans, grants or
aids. According to World Bank (1997), Foreign Direct Investment is the
investment made to acquire a lasting management interest, usually at least 10%
of voting stock, in an enterprise operating in a country other than that of the
investor.
International Monetary Fund‟s Balance of Payments Manual
defines foreign direct investment (FDI) “investment made to acquire a lasting
interest in foreign enterprises with the purpose of having an effective voice
in its management”. The World Trade Organisation (1996) also observes that
foreign direct investment occurs when an investor based in one country (the
home country) acquires an asset in another country (the host country) with the
intent to manage that asset. The resultant capital relocation will boost
investment in the recipient country and according to Summers (2000:16) brings
enormous social benefits. It is the process of investing, by foreigners, in the
economy of another country. These funds are generated outside the investment
recipient country. FDI can be in form of build, operate and transfer (BOT), turn-key,
leveraged buy out, venture capital or starting a new company from the scratch.
Foreign direct investment is viewed as a major stimulus to
economic growth in developing countries. Its ability to deal with major
obstacles, namely, shortages of financial resources and technology, skills
acquisition and training, as well as contribution to corporate tax revenue in
the host country, has made it the centre of attention for policy-makers in
low-income countries in particular. However, only a few of these countries have
been successful in attracting significant FDI flows.
1.1 BACKGROUND OF
THE STUDY
Nigeria, like other African countries, recognizes the
contribution of FDI to economic development and integration into the world
economy. Nigeria since pre-independence era till date has being making
considerable efforts to improve its investment climate through liberation,
deregulation, privatization and enabling laws and incentives. Among these are:
2. Industrial Development (Income Tax Releif) Act of 1958
3. Companies Act of 1968, Banking Act of 1969, Petroleum Act of
1969, etc
4. National Office of Industrial Property Act 90 of 1979
5. Nigerian Enterprises Promotion (Issues of Non-voting Shares)
Act 1987
6. The Nigerian Enterprises Promotion Act No. 54 1989
7. Nigerian Investment Promotion Commission, etc
However, the much-expected surge in FDI into Nigeria has not
occurred. This is particularly worrisome, as Nigeria possesses almost all the
attributes of a good FDI destination. These include size of market, availability
of natural resources, low labour cost and high productivity, incentives, high
level of human capital development, major markets proximity, etc.
Nigeria needs FDI because it is favoured over other forms of
private capital flows. Portfolio equity and debt are subject to reversals in financial crises period,
while FDI is more resilient. (Lipsey: 2001).
FDI is critical to the country as it is the key source of
large pool of capital necessary for the development of the country. However,
despite several fiscal incentives by the government, foreign direct investment
has remained dismal (The Punch 2002) The cost of not having foreign direct
investment is high. A decline in investment reduces the expansion of output,
variety and quality, leading to a reduced market share and potentially
declining non-price competitiveness.
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Item Type: Project Material | Size: 83 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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