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ABSTRACT
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The objective of this research work is provides an insight into the impact of foreign investment on the Nigeria on the Nigerian economy. The methodology used in gathering data for the research study includes the interviews and questionnaires methods with elements of the secondary sources of data collection.
The major findings of the research study was the fact that foreign investments faces a lot of problems ranging from security problems, environmental problems economic problem to an effective contribution to the development of commerce and industry in Nigeria.
The recommendations put forward as a means of tackling the problems identified includes the deliberate attempt of the government to boost security in the country and to undertake adequate measures to solve environmental problems through adequate maintenance of facilities.
TABLE OF CONTENTS
Title Page
Declaration
Approval Page
Dedication
Acknowledgement
Abstract
Table of Contents
CHAPTER ONE
1.0 Introduction
1.1 Background to the Study
1.2 Statement of Problem
1.3 Objectives of the Study
1.4 Research Question
1.5 Significance of the Study
1.6 Scope of the Study
1.7 Historical background of the Case Study
1.8 Definition of Terms
CHAPTER TWO
2.0 Literature Review
2.1 Conceptual Framework
2.2 Current economic problems and possible role for foreign investment
2.3 factors inhabiting foreign investment inflow into Nigeria
2.4 Policies for encouraging foreign investment since SAP
CHAPTER THREE
3.0 Research Methodology
3.1 Introduction
3.2 Population and Sample Size
3.3 Sampling Techniques
3.4 Sources and Method of Data Collection
3.5 Method of Data Analysis
3.6 Justification for the Choice
CHAPTER FOUR
4.0 Data Presentation, Analysis and Interpretation
4.1 Introductions
4.2 Data Presentation and Analysis
4.3 Test of Hypothesis
4.4 Summary of Findings
CHAPTER FIVE
5.0 Summary, Conclusion and Recommendation
5.1 Summary
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendix
CHAPTER ONE
Introduction
The country’s effort to get industrialized, substantial achievement has been recorded in many shares of the broadly conceived industrialization process. However, such achievement could not have been materialized corporations in form of capital investment.
It is a known fact in Nigeria today that the development of industries started by the foreign companies who operated through wholly-owned subsidiaries. It must be emphasized that their contributions are not only in the provision of capital but more particularly in the transfer for technology and managerial talent. Our government from the post to the present recognizes the efforts of foreign investors for all the development plans.
The government is always in support of foreign investor’s existence in the country. During the General SaniAbacha era, Nigerian was suspended from the common wealth of Nations and this lead to the low turn-up of foreign investment within that period in 1908, during the military government of General Abdulsalam, Abubakar that Nigeria was reinstated into common wealth of Nations.
Today, large numbers of foreign investors are coming to Nigeria for investments of the third National development plan (1981-1989) N11 billion out of n80 billion was reserved for the private sector. Also in recent introduction willing plan 1994-1996 was put in place to replace the five years medium term programs as a development strategy.
The twin-objectives of the 1994-1996 rolling plan (R.P) are to institute correct macro-economic policies and still fiscal discipline in other to fashion a more conducive environment for economic growth. These rolling plans also made adequately provision foreign investments. This could be seen in the head of state budget broadcast of 1996. This rolling plan was made to replace the five years medium term programs as a development strategy.
The goals of exchange rate stabilization and reversal of the high incidence of capital flight rationalization of interest rate is to sterm the decline of the real sector and increase the aggregate supply of foreign exchange through intensified export promotion to encouraged foreign investors.
At first, foreign industries were free to set-up business on their own in partnership with Nigerian states or Federal Government, thus limited manufacturing activities took place within the country, the ownership and know-how of such business were largely concentrated in the hand of foreign investors which resulted to large repetition of payment abroad.
Moreso, government relied on moral suasion, appeals and the operations of such scheme as “expatriate quota” helped in the increased of Nigerian involvement in the operations” such devices however, proved to be adequate for the attainment of National objectives and this lead to the promulgation of Nigeria enterprises promotion decree (N.E.P.D. of 1972 which was amended in 1977.
An Analysis Of Some Vital Statistics As Recorded By National Population Commission (Npc)
The Significance Of Stores Management In a Manufacturing Organisation
The decree deliberately reserved certain areas of the economy for Nigerians while stipulating the ratio of participation in remaining areas between, Nigerians and foreigners. The decree stated that Nigerian must not own less than sixty percent in the enterprise and that implies that forty percent goes to the foreign investors. The noticeable effect is that the enterprises is fully owned.
However, it should be mentioned that to own a business. For various reasons despite the indignation decree, the management of good number of the Companies are managed and controlled by foreigners as reiterated in various policy statement, the government in the pursuance of its indigenization policy continued to re-affirm it intention to welcome foreign investors mainly in view of technology that should accompany them.
As stated in the Forth National development plan, investors of both local and foreign companies will be encouraged and given maximum support-required for survival and rapid expansion.
1.1 Background of the Student
Foreign investments in Nigeria dated back to the early 20th century when European authorities recognized oil as the fuel of the future and encouraged private business to under taken aggressive exploration all over the world.
The Britain, specially, the Royal Navy had begun its exchange over from coal to oil fuel and a Britain contributor observed in the monthly journal in the Nineteenth century that “there is no bigger and no more obvious gap in our imperical equipment than the paucity of our supplies of oil. “British oil companies, therefore, began exploration in Trinidad, the east indies, Burma, Persia and elsewhere.
Although the Persian oil filed were already in production, has vast reserves, were closer to the surface and therefore required no new technology, the imperial authorities nevertheless realized that the involvement necessary to assure Britain secure supplies from that region might lead to certain political and strict complications they therefore considered that a similar source of oil within the British Empire of discovered, would be ideal.
In 1960, a Britain business man, John Simon Bergheium convicted the colonial office and the Government of southern Nigeria that, based on his knowledge of the regions geology petroleum existed in Southern Nigeria and that his company that Nigerian Bitumen corporation could found it. He had already achieved a monopoly on prospecting rights in Nigeria by buying all the drilling licenses.
For the rent six years officials in the colonial office protected Bergheim’s monopoly of the prospecting rights, rewrote mining legislation at this request creating the southern Nigerian Mining Regulation (oil ordinance) of 1907 and provided the Nigeria Bitumen corporation with a loan to support its research for petroleum. By 1912, the corporation had sink about 15 wells in southern Nigeria eastwards from the Lekki Lagoon towards the Niger Delta, and had already spent 143,000 pounds.
In September that year, however, Bergeium was killed in an automobile accident and with him died mush of the aggressive drive to find oil in Nigeria. Thus, the first search for oil in Nigeria ended in mid-1913 and was not resumed seriously for almost 25 years. Shortly after Bergeiums death, world war 1 set in and oil exploration in the country ceased until 1937, when an Anglol-Dutch consortium, shell D’ Arcy came to Nigeria and had the whole country as on concession.
Between 1938 and 1939, the company drilled seven bore-holes for about 16, 296 pounds around Owerri without any success. This second phase of the search for oil in the country was interrupted by World War II (1939-1945) BY 1951, the company had drilled its exploration well, called/HUO-1.
A second well soon followed in 1953 called AKATA-with just marginal gas. Between 1953 and 1955, shell had drilled 13 additional wells. it eventually struck its first commercial well in 1956 at Olobiri in present day Bayelsa state. That discovery, after investments of over 30 million naira, proved the venture commercially viable.
Later in the same year, more oil was found at a farm in River state. Subsequently, the construction of Pipelines from Oloibir to Port Harcourt was undertaken to facilitate export. The export of the first cargo of crude oil took place on 17th February, 1958.
The successes of shall encourages other companies to join in the exploration race. Mobil had been award the Sokoto Basin, the Benue Through and Fringes of the Niger Delta to explore in 1956. After some seismic and field geological surveys in the Sokoto Basin where it recorded no success, it withdraws from Sokoto and obtained licenses to explore in the Dahomey Basin.
Between 1959 and 1961, Mobile had drilled four wells in Gohomy Basin which ever dry in 1959, the sole concession right over the whole country, earlier grant over the whole country, earlier granted to shell, was reviewed and exploration rights were intended to other foreign companies.
This was in line with the policy of increasing the place of exploration, while at the same time ensuring that the country was not too dependent on one company or nation. Shell thus, relinquished about 50 percent of its Niger Delta Concession and retained the successful or potentially successful parts. In April 1960, Teneco, an American company arrived in Nigeria and was granted a concession along the western coat. This was the position when, in October 1960, Nigeria gained in dependence from Britain.
The attainment of independence in 1960 led to intense exploration activities as the nation put in place policies that would lead to major economic and potential charge in the oil sector. Firstly, explore inNigeria. Oil was also becoming a vital energy fuel and Nigeria’s production had more than tripled from 5,000 barrel per day in 1958, to 17,000 barrels per day in 1960.
Within the first five years of independence, therefore, not less than nine international oil companies had become active in Nigeria, namely: Shell BP, Mobil, Teneco, Texaco, Gult (now chevron), satrap (New ELP), Agrip Philip and Esso.
These international were soon joined in the late 1960, by Japan Petroleum, Occidental, Deminex Union Oil, Niger Petroleum and Niger Oil Resources.
The climax ofthat era was the formation of the Nigerian National Oil Cooperation (NNPC), and the admission of Nigeria into OPEC, the organization of petroleum exporting countries in July, 1971.
Oil production had, by this period, moved from 17,000 barrels per day (BPD) in 1960 to 45,00 bpd in 1966 and later to 1 million barrels per day in 1970, shortly after the civil war, Nigeria’s economy because increasingly depending on crude oil, on account of revenue accruing thereof, to meet the changes on the post. Civil War era. The Nigerian government also entered into joint venture agreements with several multinational oil companies engaged in oil exploration and production activities in the country.
In January 1986, the government introduced more alternative fiscal terms for private sector participation in oil and gas development in the country. This was through a memorandum of understanding (MOU) providing a guarantee margin of two dollars per barrel to the producing companies in exchange for certain exploration and enhanced recovery commitments.
Five years, later, the government offered new MOU’s which provided for much better terms in recognition of inflation and to encourage foreign partners to continue to expand their investments. Since then, the investments of the major oil companies in the country have risen steadily in response to the incentives. This response has been most evident not only in the oil sector but also in the vast and continuing expansion of activities in the gas sector led by Shell, Mobil and Chevron.
1.2 Statement of the Problem
For too long our economic policies have tended towards given the wrong impression Nigeria is the cynosure of all investors, hence needed to be shielded from exporters (foreign investors), it is now clear that neither the store walls not the layers of bureaucracy has help the nation’s economy developmental effect a bit. Indeed the maze of bureaucracy had for too long frustrated or scared away many genuine investors, foreign or local.
Also the controversy over foreign investors has generated more heat of recent. The activities of multinational (which incidentally perform to a greater extent in the field of private foreign investment) have been under debated both in the United Nation (UN) and the parliament of the third world countries these days.
Hence, there are two major school of thought regarding the issue of private foreign investment (P.F.I.) in developing countries and they both exist at the two opposite extremes of a continuum. Manu believed that they founder of development is (P.F.I.) it bridges the balance of payment gap, the resources gap, the saving and technological gap, the long run and the per capital income gap.
But others argued contrary that private foreign investment has been one of the major factors contributing to the development cries that P.F.I. is merely the twentieth century refinement or economic outcome of the unpanalists power of the capital stock, dominating the development of market structures which determines the allocation of resources and distribution of income. The private foreign investment (P.F.I.) is through to stand in the way of National Policy efforts for a planned growth, and to frustrate the local entrepreneurial talent and the rising of employment.
1.3 Objectives of the Study
The need for rapid industrial development of a country is imminent and this and this invariable means the need for finance.
However, the existing domestic sources of financial are considered inadequate to meet the large demand usually identified with industrial projects. The Nigerian capital market is narrow and small. Issuing houses and investment trust are insufficient or insignificant to play any meaningful role. The purpose of this research is thus, carried out with some specific aspiration in mind and it is envisage that the following objectives would be achieved namely:
1. Artificially assed the form and nature of foreign investment in Nigerian Economy and to determine the extent to which it will contribute to the development of other Economic activities.
2. To evaluate the perspectives of the opponent who held the view that foreign investment lead to strategic dependence.
3. To pi-point areas lapses and various problems faced by multinational companies in the presentation under which foreign investors operate.
1.4 Research Hypothesis
The hypotheses stated below are intended to be tested:
H1: Foreign Investment is responsible for the growth of Nigeria Economy.
H0: Foreign investment has not made any meaningful contribution to the Nigerian’s socio-economic development of commerce and industry.
1.5 Significant of the Study
This study is considered relevant and desirable at this stage of Nigeria’s industrial development because.
1. It will provide a meaningful and purposeful guide for the evaluation of foreign investment and its impact in the development of commerce and industry in Nigeria and to some extent assist other foreign investors who would like to invest in the country.
2. The study will also be important to the government in formulating the necessary policy guideline at all levels.
3. Nigerian industrialist will also benefit immensely, hence the need for joint ventures and partnership with the foreign investors will be activated and encouraged.
4. It is also hope that the study will be useful to other industrial policy makers in the country and the academic community.
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