An Investigation of Determinants of FDI Inflows in Nigeria: A Case Study of the Nigerian Investment Promotion Commission (2000–2020)
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Background of the Study :
Foreign Direct Investment (FDI) is critical for stimulating economic growth, technology transfer, and job creation in emerging markets. In Nigeria, the Nigerian Investment Promotion Commission (NIPC) has been central to attracting and facilitating FDI between 2000 and 2020. Various factors, including political stability, regulatory frameworks, market potential, and infrastructure quality, influence FDI inflows (Okonkwo, 2023). Studies suggest that a favorable investment climate, supported by transparent policies and effective promotional strategies, can significantly enhance FDI (Adeniyi, 2024). However, challenges such as bureaucratic delays, policy inconsistencies, and security concerns often deter investors. This study investigates the key determinants of FDI inflows in Nigeria using the NIPC as a case study. By analyzing investment trends, policy changes, and market indicators, the research aims to provide insights into the barriers and drivers of FDI, and to recommend measures to improve Nigeria’s attractiveness to foreign investors (Chukwu, 2025).
Statement of the Problem
Despite concerted efforts by the NIPC, FDI inflows in Nigeria have remained below expected levels. Bureaucratic hurdles, regulatory uncertainties, and infrastructural inadequacies continue to pose significant challenges for foreign investors. These constraints not only limit capital inflows but also hinder technology transfer and economic diversification. The study seeks to identify the determinants that most significantly impact FDI inflows and assess the effectiveness of current promotional strategies. Understanding these factors is crucial for formulating policies that enhance Nigeria’s investment climate and boost foreign capital inflows (Okonkwo, 2023; Adeniyi, 2024).
Objectives of the Study:
1. To identify the determinants influencing FDI inflows in Nigeria.
2. To assess the effectiveness of the NIPC’s investment promotion strategies.
3. To propose policy recommendations to enhance FDI inflows.
Research Questions:
1. What are the key determinants of FDI inflows in Nigeria?
2. How effective are the NIPC’s promotional efforts?
3. What policy measures can improve the investment climate?
Research Hypotheses:
1. H1: Political stability positively influences FDI inflows.
2. H2: Regulatory clarity enhances foreign investment.
3. H3: Improved infrastructure significantly boosts FDI.
Significance of the Study (100 words):
This study provides essential insights into the determinants of FDI inflows in Nigeria. Its findings will inform policymakers and the NIPC on strategies to create a more favorable investment climate, thereby attracting more foreign investment, fostering technology transfer, and supporting sustainable economic growth (Chukwu, 2025).
Scope and Limitations of the Study:
The study is limited to examining FDI determinants in Nigeria using data from the NIPC from 2000–2020. Limitations include external global market influences and data availability.
Definitions of Terms:
1. FDI: Investments made by foreign entities in domestic businesses.
2. Investment Promotion: Strategies to attract and facilitate foreign investment.
3. NIPC: Nigerian Investment Promotion Commission
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