An Overview of Foreign Investment in Nigeria: 1960 - 1995
This paper examines the crucial role of direct foreign investment in Nigeria's economic development, with particular emphasis on transfer of technology, support for balance of payments and the facilitation of the structural adjustment programme. The paper then evaluates the country's efforts at promoting foreign investment and highlights important lessons to be learnt over the years. On the basis of available data, the paper believes foreign investment out-turn in Nigeria was generally unsatisfactory. Between 1970 and 1976, investment inflow through existing enterprises in Nigeria rose in nominal terms from N251.0 million to N757.4 million. Thereafter, it fluctuated freely, rising to N2,193.4 million in 1982 and N10,450.2 million in 1990; after which it crashed to a low of N510.2 million in 1991, before surging to N11,730.7 million in 1992. During the same period, investment outflow also fluctuated freely, from N129.4 million in 1970 to N282.0 million in 1975; N568.5 million in 1982; N10,914.5 million in 1990. It then dropped sharply to N3,461.§ million in 1992. Capital inflow through newly established companies also rose from N27.9 million in 1990 to N1I,405.4 million in 1993; and then dropped to N292.5 million in 1994. The paper also identifies a number of the factors which are believed to have hindered effective inflow of foreign investment in Nigeria, particularly during the era prior to the introduction of the Structural Adjustment Programme (SAP). These include the strict regulatory framework and institutional arrangements which have had the unintended effects of retarding inflow of foreign investment. In addition, there is the problem of huge external debt service burden and the general instability which has characterised our socio-political environment over the years. Since the adoption of the SAP, however, a number of policies and programmes have been introduced which tend to enhance and facilitate inflow of foreign investment. These include the introduction of Industrial Development Coordinating Committee (IDCC) to ease procedures for obtaining a number of mandatory business permits; the restructuring and streamlining of incentives for industrial development and non-oil export promotion; adoption of privatization and commercialization programme, shift to market friendly macro-economic policies; general improvement in infrastructure, including the establishment of Export Processing Zone; and the abrogation of the Nigerian Enterprise Promotion Decree as well as the Exchange Control Act. The Paper then highlights some important lessons as they relate to prospects for increased inflow of foreign investment into Nigeria. These include the need to sustain market friendly macro-economic policies which other developing countries that are competing for foreign investment with Nigeria had introduced many years previously; the need for improvement in our political climate; and the importance of increased efficiency of Nigeria's labour force through enhanced investment in human capital formation.
Odozi, V.A. (1995). An Overview of Foreign Investment in Nigeria: 1960 - 1995. CBN Occasional Paper, No. 11. 1 - 41.