External Capital Inflows and Telecommunication Sector in Nigeria

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue X, October 2018 | ISSN 2454–6186

External Capital Inflows and Telecommunication Sector in Nigeria

EWUBARE, Dennis Brown, UDOH, Friday Okon

Rivers State University, Port Harcourt, Nigeria

Abstract: – The study examined the impact of external capital inflows on telecommunication sector in Nigeria. The objectives of the study were to examine the impact of, foreign portfolio investment, trade openness and foreign direct investment on telecommunication output. Thus, to achieve the stated objectives, data from the CBN statistical bulletin was collected and the econometric method of co-integration and Error Correction Mechanism were used to analyse the data. The ADF unit test result showedthat the variables; foreign portfolio investment, trade openness, foreign direct investment and telecommunication output were stationary at first difference. Also, the Johansen co-integration result showed that there exist two co-integrating equations among the variables. The ECM results showed a percentage increase in FDI will cause an increase in telecommunication output by 1.01905%. Also, a percentage increase in foreign portfolio investment will increase telecommunication output by 0.966238%. The coefficient of trade openness showed that a percentage increase in trade openness will increase telecommunication output by 0.629302%. The study asserts that foreign direct investment, trade openness and foreign portfolio investment are vital to the inflow of external capital in the telecommunication sector. Thus, it is recommended that government must create a conductive business environment by improving its infrastructural facilities assuring security of life and property and maintains policy consistency in order to boost investment in the country.

Key Words: External Capital, Inflow, Tele-communication, Sector, Trade Openness, FDI

I. INTRODUCTION

There is no nation in the world without the aim of accomplishing economic growth and development. However, this can only be possible if a country has adequate resources at its disposal (Chimobi and Igwe, 2010). In many developing countries, the resources to finance the optimal level of economic development are in short supply. Thus, the need for external source of finance. External capital inflowsinvolve the increase in the amount of money available from external or foreign sources for the purchase of local capital assets such buildings, land, machines. External inflow could be in the form of portfolio investment and FDI (Udensi, 2015).

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