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Foreign Direct Investment and Economic Growth in Nigeria: An
Empirical Reassessment [1991-2019]
Bamigbade D. Zainab¹
*
, Omoyemi A. Ruth ², Aderibigbe J. Sanmi³, Biaoku D. Oluwaleke
4,5
1
Department of Economics, University of Ibadan, Oyo State, NGA
2
Department of Economics, Tai Solarin University of Education, NGA
3
Department of Economics Joseph Ayo Babalola University NGA
4
Department of Extension Research and Liason service, NGA.
5
Nigeria Institute for Oceanography and Marine Research, Victoria Island, Lagos, NGA
*
Corresponding author
DOI:
https://dx.doi.org/10.47772/IJRISS.2025.915EC00763
Received: 19 July 2025; Accepted: 05 August 2025; Published: 20 November 2025
ABSTRACT
This paper empirically interrogates the relationship between Foreign Direct Investment and economic growth in
Nigeria from 1991 to 2019. Despite a string of policies designed to lure multinational capital, national output
has seldom responded as policymakers hoped. Data for the experiment were drawn from the Central Bank of
Nigeria and the World Development Indicators; the analysis itself is framed within the Autoregressive
Distributed Lag bounds-testing strategy, which illuminates both short-run wiggles and long-run yawns.
Estimation results are at odds with popular intuition: FDI shows a negative but statistically mute influence on
Gross Domestic Product whether one is looking at quarterly snapshots or annual summaries. In contrast,
homegrown investment and the prevailing interest rate step forward as loud negatives, each landing well inside
conventional confidence brackets. A starving error-correction term reveals that about 64.3 percent of any wiggle
away from the long-run track is pulled back into line each year.
Routine health checks on the specification-serial correlation, heteroskedasticity, structural breaks-all come back
clean. Stability plots stay neatly within their approval bands, further bolstering confidence in the findings.
Recent research indicates that Foreign Direct Investment in Nigeria has yet to deliver marked economic
expansion. Heavy reliance on oil services, unreliable power systems, and cumbersome regulation chains have
kept inflows parked in low-value industries. Scholars urge Abuja to revamp port logistics and steer new deals
toward agriculture and manufacturing, where the growth ripple would be widest.
Keywords: Foreign Direct Investment, Economic Growth, Nigeria, ARDL Model, Domestic Investment,
Institutional Reform
INTRODUCTION
Foreign Direct Investment has long appeared in textbooks as a magic bullet for lagging economies. Capital on
its own can plug savings gaps, while technology and know-how travel in the suitcase with expatriate executives.
From Indonesia to Mexico, policymakers have slashed tariffs and promised tax holidays in hopes that foreign
firms will translate easy rules into new factories and payrolls.
Nigeria remains Africas most populous nation and its largest economy measured by head count, a distinction that
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routinely places it in the sights of foreign direct investors. Countries as varied as the United States, China, the
Netherlands, and France have inched forward with projects over the years, yet the inflows appear far from stable.
Chronic defects-potholed roads, power outages, and insecurity-keep pushing would-be investors to the exit.
Regulatory flip-flops and red tape only deepen the unease. Reforms such as the NEPAD framework and assorted
local content laws promised a new chapter, but volume and quality of FDI trail behind those seen in peer states
like Egypt or South Africa.
Between 1991 and 2019, Nigeria undertook a series of structural reforms designed to draw in long-term foreign
capital. These efforts encompassed the Structural Adjustment Programme (SAP), banking consolidation in 2004,
pension reforms in 2006, and telecommunications sector liberalization. While these measures improved financial
depth and connectivity, their impact on foreign direct investment was uneven. Persistent infrastructure issues
and weak governance prevented these reforms from fully generating diversified or stable inflows.
In principle, foreign capital tidies up the domestic savings shortfall, brings fresh machines and know-how, and
puts people to work. That chain reaction-horizontally spreading firms across sectors, vertically knitting suppliers
to corporate anchors-does not always materialize. Studies show the gear sometimes grinds; spinover benefits
evaporate without careful safeguarding. Some papers, such as those by Adegbite and Ayadi or by Adeleke Ojo
and others, tout outright boosts to GDP. Others, including Akinlo, warn that earnings leaked abroad or get stuck
in the oil and gas enclave, leaving growth statistics unchanged or, in rare cases, slightly nudging them downward.
Nigeria has long ranked among Africas largest recipients of foreign direct investment, yet high unemployment,
sluggish industrial diversification, and puny rates of technology transfer continue to mark its economy. Data
from 1991 to 2019 show that, despite intermittent capital inflows, the share of FDI in GDP hovered around the
margin, and severe oil-price slumps, sudden regulatory turnabouts, and bouts of political turbulence sent inflows
tumbling at several junctures.
This article attempts a fresh appraisal of the relationship between FDI and growth by working with a cleaned,
up-to-date dataset and applying more robust econometric techniques. It looks beyond the headline FDI-GDP link
to gauge how domestic investment, interest rates, and other co-factors interact with the foreign capital. The goal
is to furnish policymakers with concrete, evidence-based advice on harnessing FDI for a more resilient growth
path.
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
Conceptual Clarification of Key Variables
Foreign Direct Investment (FDI): Foreign direct investment (FDI) describes a cross-border placement of
capital carried out by an economic resident who seeks to establish a durable interest in an enterprise located
abroad. Such an investment often accompanies not just money, but also advanced technology, seasoned
management, and the physical means for production. The United Nations Conference on Trade and Development
(UNCTAD) identifies greenfield projects, mergers-and-acquisitions, and equity partnerships as its principal
forms, each one augmenting the host countrys production potential.
In West Africa Nigeria routinely ranks as the regional magnet for inbound FDI from the United States, China,
the United Kingdom and beyond. Yet a striking number of these inflows remain locked within the oil-and-gas
arena; manufacturing, information-and-communications technology and other fields receive far less attention.
This sectoral lopsidedness dulls the usual benefits, limiting job creation and curtailing the ripple effects that
might carry down supply chains.
Economic Growth: Economic growth denotes a prolonged expansion in a nations productive base, and it is
usually tallied in terms of real Gross Domestic Product. Observers frequently translate the phenomenon into
higher living standards, broader employment opportunities, upgraded roads and bridges, and, more abstractly,
an enlarged capacity to make things work. The economist Kuznets (1973), once remarked that growth
encompasses a steady improvement in the capacity to deliver a wider variety of goods and services, a motion
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driven by both technological leaps and the steady polishing of economic institutions.
Empirical Review
The volume of research examining foreign direct investment (FDI) and economic growth in Nigeria is
considerable, yet its verdicts remain unsettled. A study by Adeleke, Olowe, and Fasesin (2014) applied ordinary
least squares to the 1999-2013 period and concluded that FDI makes a statistically significant contribution to
growth. John (2016), working with a longer time series that stretched from 1981 to 2015, similarly recorded a
positive, if modest, correlation between FDI inflows and GDP.
Scepticism, however, also features prominently. Akinlo (2004) pointed to Nigeria's limited absorptive capacity
and frail institutions, arguing that these factors restrict the inflows ability to stimulate real growth. Awe (2013)
reported even harsher results, noting a negative link and claiming that foreign capital often crowds out local
entrepreneurs. Umeora (2013) echoed this criticism, emphasizing that most FDI gravitates toward the oil sector,
an industry notorious for operating in economic enclaves.
In more recent work, Okumoko and Karimo (2015) employed vector autoregression and found that the causative
arrow may run largely in reverse: improving macroeconomic performance attracts FDI rather than the other way
around. Their observation highlights how contingent the FDI-growth relationship is and how sensitive it proves
to the chosen empirical technique.
The cumulative evidence leaves an inconclusive picture, with any definitive assessment of FDI's impact on
Nigeria hinging on a medley of contextual variables: the sector into which capital flows, the quality of domestic
institutions, overall macroeconomic stability, and the host economy's ability to absorb and deploy external
resources productively.
The rising number of dissenting voices is one that warns of excessive appreciation and accompanying growth
impacts of FDI in low or unstable institutional arrangements. E.g., Asiedu (2006) focuses on the fact that
corruption and lack of proper governance substantially reduce the absorptive capacity of African economies, and
Alfaro et al. (2004) states that FDI can enhance growth only in places where financial markets are well
developed. In line with the same view, Transparency International (2020) classifies Nigeria in the list of
corruption-prone jurisdictions implying that institutional weaknesses present a middle ground between FDI and
growth. The high regulatory frictions are echoed in the World Bank Ease of Doing Business reports, which pose
a question that FDI inflows without credible reforms in contract enforcement, property rights and regulatory
congruency alone cannot ensure spillover effects in productivity.
THEORETICAL FRAMEWORK
The framework informing this inquiry rests on three main pillars: the Neoclassical Growth Model, the New
Growth Theory, and what scholars term the Positive Spillover Theory of foreign direct investment. Each theory
carves out a distinct pathway by which capital, labor, and ideas circulate among nations and eventually affect
output.
Neoclassical Growth Model (Solow, 1956)
A Core Proposition, first sketched by Solow, is that total output Y springs from an interplay of capital K,
workforce L, and the ever-abstract element technology A. Though fresh injections of capital-nation, personal, or
foreign-keep the wheel turning, the law of diminishing returns insists that each new unit of K delivers a smaller
bonus than its predecessor. In Nigerias oil-heavy landscape, inflows swell the stock of K rapidly yet fall short of
digging deeper technological roots.
New Growth Theory (Romer, 1986; Lucas, 1988)
A Second Current, usually tagged New Growth Theory, flips the script by suggesting that knowledge itself
becomes the engine rather than a mere afterthought. Echoing Romer, many argue that R&D and human-capital
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spending breed their own increments of technological advance, thereby planting an endogenous foundation for
continuing growth. Under this reading, if foreign firms transfer skills, tinker with processes, or set local
researchers to work, FDI might well ignite a self-propelling cycle rather than a one-off boost.
Positive Spillover Theory of FDI
The Positive Spillover Theory, famously outlined by Blomström and Kokko (1998), maps out several pathways
through which foreign direct investment (FDI) can nudge a host economy in the right direction. One channel is
direct technology transfer, where the everyday practices of a multinational serve as a live demonstration that
local firms can imitate.
Labor mobility provides another route, as engineers and managers sometimes leave foreign subsidiaries and
carry new skills with them. Competition plays its own role, sharpening the knives of domestic companies that
suddenly find themselves under pressure to streamline. Strong supplier linkages offer a more mechanical
pathway; multinational buyers and local vendors often discover that swapping contracts saves time. Yet all of
these potential gains hinge on the absorptive capacity of the receiving country, which includes everything from
educated workers to dependable roads and a rules regime that encourages rather than obstructs adaptation.
Summary and Research Gap
The Nigerian FDI-growth literature is thick, yet researchers keep arriving at different verdicts. One reason is the
heavy use of standard OLS regressions that fail to tease apart short-run wiggles from long-run trends, leaving
important dynamic behavior in the shadows.
This paper intends to shine a light on that very behavior by adopting the ARDL bounds-testing framework, a
procedure tailored for cointegrated systems that can track both immediate shocks and their lingering effects. In
doing so, the study reopens the question of whether inflows of foreign capital truly turbocharge growth when the
broader macroeconomic landscape is brought back into view.
METHODOLOGY
Research Design
The study is framed as a quantitative investigation that relies on econometric time-series techniques. By working
with annual figures from 1991 to 2019, it seeks to map out how Foreign Direct Investment (FDI) and Nigerias
economic growth influence one another over both brief disturbances and longer-moving equilibria. That dual
focus on short-run wiggles and long-haul steadiness ultimately guided the selection of a strictly numerical setup.
Nature and Sources of Data
Secondary time-series are drawn almost entirely from the Central Bank of Nigerias own publications, notably
the Statistical Bulletin, its Annual Reports, and the periodic Statements of Accounts. Supplemental
macroeconomic series come from the National Bureau of Statistics bailiwick as well as the World Banks World
Development Indicators online repository.
Real Gross Domestic Product (GDP) serves first and foremost as the headline yardstick for economic expansion.
Foreign Direct Investment (FDI) is specified as inflows expressed as a share of GDP, while Gross Domestic
Investment (GDI) gauges home-grown capital efforts in plain currency terms. The interest-rate channel finds its
stand-in in the market-clearing INTR variable, a concise stand-in for monetary policy thrusts.
Model Specification
Neoclassical Growth teaching lays the original groundwork, yet the setup borrows from newer strands of
endogenous-growth thinking to account for feedback loops between capital, technology, and productivity. The
model is rendered broadly as
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Y_t = α + βFDI_t + δGDI_t + φINTR_t + θY_(t−1) + ε_t,
where Y_t denotes real output in period t, a customary lagged dependent-term smooths persistent shocks, and
the disturbance ε carries standard white-noise assumptions.
While the ARDL framework is well suited to mixed-order time series, the study recognises that complementary
robustness checks such as Vector Error Correction Models (VECM) or Granger causality tests could further
strengthen the empirical narrative. Given data and time constraints, these were not implemented here but remain
a useful extension for future research.
Estimation Technique and Justification for ARDL
The current analysis makes use of the Autoregressive Distributed Lag (ARDL) Bounds Testing framework first
outlined by Pesaran, Shin, and Smith in 2001. This methodological choice rests on several practical advantages.
First, the ARDL specification comfortably accommodates time series that exhibit mixed orders of integration,
be that stationary at level I(0), differenced I(1), or both.
Second, the technique retains its statistical integrity even in fairly small datasets; in this case, the span of
twentynine years falls well within that reliable range.
Finally, by embedding the Error Correction Model within the ARDL structure, the researcher can estimate
longrun equilibrium parameters alongside the short-run adjustment coefficients in a single step.
The general representation of the ARDL model follows the familiar lagged dependent-variable format:
The Bounds Test for cointegration employs the F-statistic alongside the critical values compiled by Pesaran, Shin,
and Smith (2001). When the computed F-statistic surpasses the upper bounds, researchers may conclude that a
stable long-run association links the time series under scrutiny.
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Diagnostic and Stability Tests
To determine model reliability, the study performed different diagnostic tests
1. Unit Root Analysis: Stationarity is tested with the Augmented Dickey-Fuller and Phillips-Perron
procedures.
2. Serial Correlation: The Breusch-Godfrey-LM test flags any hidden autocorrelation. Heteroskedasticity:
Researchers lean on the Breusch-Pagan-Godfrey statistic to catch uneven variance.
3. Residual Normality: The Jarque-Bera gauge confirms whether errors behave like a bell curve.
4. Stability Model: CUSUM and CUSUM-of-squares graphs track coefficients for drifting out of bounds.
Passing these tests reassures users of the ARDL frameworks robustness and efficiency.
RESULTS AND DISCUSSIONS
Descriptive Statistics
Table 1 provide descriptive statistics which assist in evaluating the central tendency and dispersion of the dataset
for closer inspection of its variables.
Table 1: Summary of Descriptive Statistics (1991–2019)
Variable
Mean
Median
Minimum
Std. Dev.
Observations
GDP
52.34
51.97
32.12
11.84
29
FDI
2.21
2.10
0.87
1.12
29
GDI
16.43
16.28
8.47
4.37
29
INTR
17.83
17.25
7.50
4.61
29
Computation using EViews 12
Interpretation: With a consistent increasing trajectory over the years, discrepancies in GDP have been observed
with it demonstrating the highest variability. FDI is indicative of low average value in Nigeria's investment
climate but with considerable volatility, signaling inconsistencies and unpredictability. Interest rates on average
are still relatively high, which may stifle investment both domestically and internationally.
Trend Analysis of Variables
As illustrated in Figure 1, GDP, FDI, and GDI exhibit trends between the years 1991 to 2019. This aids not only
in identifying the its cyclicality but also in examining whether any relationships exist among these metrics.
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Interpretation:
While GDP increases on a yearly basis, FDI is more volatile, impacted by the price of oil, international economic
downturns, and domestic policy changes. GDI is smoother than FDI but still shows declines during significant
economic recessions (for example 2008, 2016).
Correlation Analysis Table
Correlation Matrix
Variables
GDP
FDI
GDI
INTR
GDP
1.000
0.182
0.318
-0.224
FDI
0.182
1.000
0.441
-0.197
GDI
0.318
0.441
1.000
-0.522
INTR
-0.224
-0.197
-0.522
1.000
Interpretation:
Foreign direct investment in Nigeria exhibits only a slender positive correlation with gross domestic product,
barely noticeable. In contrast, the gauge economists sometimes term gross domestic investment moves in tighter
emotional sync with GDP, hinting that money circulating inside the country's borders may drive growth more
forcefully. Movements in the interest rate drift in the opposite direction, reluctantly pulling away from both
national output and the investment series.
Unit Root Test
An indispensable first step for drawing reliable conclusions from time series observations is to verify stationarity.
The Augmented Dickey-Fuller test was employed for that purpose, as its widespread acceptance offers both
robustness and interpretive clarity.
Table 3: ADF Unit Root Test Results
Variable
Level
First Difference
Order of Integration
GDP
Non-stationary
Stationary
I(1)
FDI
Stationary
–
I(0)
GDI
Non-stationary
Stationary
I(1)
INTR
Stationary
–
I(0)
Interpretation:
The combination of I(0) and I(1) supports the application of the ARDL bounds testing approach, which allows
for the inclusion of variables integrated at different levels, provided none are I(2).
ARDL Bounds Test for Cointegration
Researchers commonly deploy the bounds test when they wish to establish whether a statistically significant
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long-run linkage persists between non-stationary time series.
Table 4: Bounds Cointegration Test
F-statistic
Lower Bound I(0)
Upper Bound I(1)
Decision
5.217
3.23
4.35
Cointegration exists
Interpretation:
The calculated F-statistic sits above the upper-bound critical threshold set for a 5 percent significance cut-off.
That position in the distribution forces a rejection of the null hypothesis, which had maintained that no
cointegration was present. By extension, a stable, long-run linkage among the series is now firmly established.
Long-Run Estimates
Table 5: ARDL Long-Run Coefficients
Variable
Coefficient
Std. Error
t-Statistic
Prob.
FDI
-0.104
0.087
-1.20
0.240
GDI
-0.256**
0.107
-2.39
0.025
INTR
-0.311**
0.128
-2.43
0.022
C
68.213
5.144
13.26
0.000
Figure 4: Long-run ARDL Coefficients Chart
Interpretation:
The foreign-direct-investment coefficient in the present analysis emerges as both negative and statistically
insignificant. This finding is fretfully consistent with earlier studies such as Awe (2013) and Akinlo (2004),
which express skepticism about foreign capitals ability to propel growth in resource-rich contexts like Nigeria.
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Likewise, the GDI and INTR terms display pronounced negative values, a signal that persistent bottlenecks in
resource allocation and stubborn clefts in the financial system continue to plague the economy.
Short-Run Estimates and Error Correction
Table 6: ARDL Short-Run Dynamics and ECT
Variable
Coefficient
Std. Error
t-Statistic
Prob.
D(FDI)
-0.053
0.061
-0.87
0.392
D(GDI)
-0.144**
0.067
-2.15
0.041
D(INTR)
-0.089
0.064
-1.39
0.175
ECT(-1)
-0.643***
0.112
-5.74
0.000
Figure 3: Short-run Coefficients Bar Chart
Interpretation:
The quarterly-moving GDI series alone explains most of the immediate change. Its error-correction coefficient
is both negative and highly significant, with a one-percent p-value. Roughly 64.3 percent of any departure from
the long-run path is restored each calendar year.
4.8 Diagnostic and Stability Tests
Table 7: Residual Diagnostic Tests
Test
Value
Prob.
Conclusion
Serial Correlation (BG test)
1.74
0.184
No serial correlation
Heteroskedasticity (BP test)
2.21
0.217
No heteroskedasticity
Normality (Jarque-Bera)
0.983
0.611
Residuals are normal
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Figure 5: Histogram of Residuals
Histogram showing normal distribution of residuals.
Figure 6: Residuals vs Fitted Scatter Plot
Homoscedasticity test using residual scatter plot.
Interpretation:
The model successfully clears the usual diagnostic hurdles, a finding that bolsters confidence in the reported
estimates. Residuals display a near-normal distribution and maintain constant variance across the range of fitted
values.
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Model Stability Test
Figure 7: CUSUM Plot
CUSUM test indicating model stability over the sample period
Figure 8: CUSUMSQ Plot
CUSUMSQ test further confirms structural stability of the model.
Interpretation:
Inspection of the CUSUM and CUSUMSQ graphs reveals that both traces remain comfortably inside the
5percent confidence envelopes. This finding lends strong support to the conclusion that the underlying model
has maintained structural stability throughout the observation window.
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DISCUSSION OF FINDINGS
The rising number of dissenting voices is one that warns of excessive appreciation and accompanying growth
impacts of FDI in low or unstable institutional arrangements. E.g., Asiedu (2006) focuses on the fact that
corruption and lack of proper governance substantially reduce the absorptive capacity of African economies, and
Alfaro et al. (2004) states that FDI can enhance growth only in places where financial markets are well
developed. In line with the same view, Transparency International (2020) classifies Nigeria in the list of
corruption-prone jurisdictions implying that institutional weaknesses present a middle ground between FDI and
growth. The high regulatory frictions are echoed in the World Bank Ease of Doing Business reports, which pose
a question that FDI inflows without credible reforms in contract enforcement, property rights and regulatory
congruency alone cannot ensure spillover effects in productivity.
Recent empirical analysis indicates that foreign direct investment in Nigeria exercises little or no influence on
economic growth, whether measured over a brief horizon or extended timeline. The outcome mirrors earlier
observations that much of the inflow is funneled into oil and gas, sectors that engage few spillover linkages with
local firms.
A pronounced negative association between gross domestic investment and interest rates warns of misallocated
resources and the classic crowding-out puzzle. Such effects echo the earlier work of Okumoko and Karimo
(2015) as well as Olokoyo (2012).
For policymakers, the message is clear: stronger institutions, better roads, and a broader sectoral base are
prerequisites if Nigeria hopes to turn FDI and domestic savings into sustained growth.
CONCLUSION
This research examined how Foreign Direct Investment (FDI) shaped Nigerias economic growth between 1991
and 2019, using the Autoregressive Distributed Lag (ARDL) bounds-testing technique. The project was inspired
by a striking puzzle: enormous foreign inflows, especially in oil and gas, have failed to push the economy
forward in any sustained way.
Findings from the ARDL model present several telling points:
First, the volume of FDI exhibited a mild negative, statistically insignificant link to gross domestic product
(GDP) in both short and long horizons. The result hints that sheer capital importation matters less than the quality
of sector choices, transfer of modern techniques, and strength of the surrounding regulatory environment.
Second, gross domestic investment (GDI) along with prevailing interest rates emerged as statistically meaningful
drags on output. Those patterns likely mirror bottlenecks in local capital mobilization and financial
intermediation, ailments long associated with corruption, shifting rules, and patchy transport networks.
Finally, the models Error Correction Term (ECT) showed the expected sign and claimed a high adjustment
velocity of about 64.3 per cent, pointing to a dependable long-run arrangement even after temporary
disturbances.
Residual diagnostics reveal no traces of serial correlation, heteroskedasticity, or deviation from normality in the
error terms. Additional CUSUM and CUSUMSQ assessments corroborate that the model has retained its
structural integrity across the entire twenty-nine-year span.
Ultimately, foreign direct investment is frequently celebrated as a springboard for growth in developing
economies, yet the present analysis uncovers only fragile statistical support for such a claim in Nigeria. Lingering
structural gaps, persistent macroeconomic turbulence, and underperforming governance systems seem to blunt
the impact of both outside and home-grown capital.
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The weakness of this study is that it uses only a time series of one country up to 2019. Although this span covers
three decades of reforms, it would be better to incorporate newer data, particularly post-COVID-19 in providing
more precise results of the current macroeconomic realities in Nigeria. On the same note, a multi country panel
comparison would have helped to better generalise the findings. It is also possible that future research will
disaggregate FDI according to industry using CBN and UNCTAD data to show which industries yield the most
significant increases in growth multipliers.
Policy Recommendations
Recent research suggests a reevaluation of Nigerias engagement with foreign direct investment if the inflows are
to catalyze sustainable growth.
In order to enhance the growth effect of FDI, Nigeria needs a multi-faceted reform program:
1. Credible Power Supply: Consistent outages are costly to the operation and an unattractive risk to non-oil
investment. Improved efficiency could be liberated along with investments in renewable energy and with
opening up the power sector regulation.
2. Port and Logistics Reform: There is severe congestion at the port facility and the administration of
customs is poor which severely increases the transaction costs. Customs automation, increasing port
capacity and advanced capture of inland transport network would lessen investor uncertainty.
3. Education and Skills Development: Technology and management practices are more likely to be
transferred through FDI that will benefit the local workforce by absorbing the skills and technology. The
approaches in increasing the absorptive capacities would be strengthening vocational training, tertiary
education, and skills in ICT.
4. Regulatory Coherence and Governance: Regulatory environment has been typified in Nigeria by the lack
of predictability and duplication of regulator agencies. An efficient, allegedly transparent, and rule-based
enforcement mechanism of contracts would ease investor insecurities and minimise entry thresholds.
5. Sectoral Diversification: To responses of the present investigation it is crucially urgent that fiscal
incentives be employed strategically to guide the entry and flow of foreign finance towards
manufacturing, ICT and agriculture: the sectors that generate more employment and value-added beyond
oil. As long as policymakers fail to overcome the recurring structural and institutional obstacles, the flow
of incoming investment will remain stagnated causing the economy to miss out on a key sector of growth
and development.
Subsequent research can partition the analysis by sector, as well as exploit panel data formats, which can set
Nigeria in comparison to other similarly situated states in sub-Saharan Africa to further refine the debate
underway on policies.
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