AN ANALYSIS OF THE LEGAL FRAMEWORK FOR THE PROMOTION OF FOREIGN DIRECT INVESTMENT IN NIGERIA

AN ANALYSIS OF THE LEGAL FRAMEWORK FOR THE PROMOTION OF FOREIGN DIRECT INVESTMENT IN NIGERIA

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ABSTRACT

The legal regimes of protection of investments in Nigeria have over the years suffered not only from a lack of policy drive, but also a sustainable and development driven legal framework. Policy inconsistencies and consequent uncertainty on investment issues in the Nigerian economy has impacted somehow negatively on the psyche of both local and foreign investors who are genuinely desirous of investing in Nigeria. From all indications, the quest for greater economic development on the part of the developing host nation in any foreign investment is a primary motive for foreign investment. The maximization of capital and profit on the part of the foreign partner is the main objective of such investors. Hence the need for an elaborate legal framework for the promotion and protection for foreign investments in Nigeria becomes very fundamental.. The methodology to be employed in this research is doctrinal which includes the primary and secondary sources. This work has x-rayed the relevant Nigerian legal framework for the promotion and protection of foreign investments in Nigeria. This work has diagnosed relevant Nigerian laws as they relate to the promotion and protection of foreign investment in Nigeria. The historical evolution of foreign investment in Nigeria has been discussed. The determinant factors of and sectorial analysis of foreign investment is also treated. Issues like investment dispute resolutions, and arbitration have equally been discussed and fully analysed with proffered recommendations. Issues like privatization as they relate to investments and Nigerian economy have equally been discussed with solutions proffered. The regulatory institutions and legal mechanisms of foreign investment in Nigeria have equally been examined where some shortcomings have been observed and solutions proffered in that regard. The research established that the legal framework for the promotion of foreign direct investment in Nigeria is inadequate. The research also recommends establishing a strong legal system for the promotion of foreign investment and strengthening the relevant institutions promoting foreign investments in Nigeria.

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CHAPTER ONE: GENERAL INTRODUCTION:

1.1       BACKGROUND TO STUDY

Foreign Direct Investment is widely regarded as the potential source of funding for

growth and development and is generally a global policy of many countries, whether

developed or developing. The United Nation Industrial Development Organization

reported that the flow of foreign direct investment (FDI) globally reached an all time

high of USD 1.3 trillion during the year 20001. Investment promotion agencies (IPAs) in

many parts of the world, especially in the highly developed economies of Europe and

North America, and also booming Asian economies of China, recorded high volumes of

business and celebrated further success in attracting new investment to their countries.2

Most of this investment flow however, was concentrated in the highly developed areas

of European Union, the United States of America and Japan which together accounted

for 71% of world inflows of FDI. Consequently the African share of world investment

fell from its previous 1% to a further low of a mere 0.67%. 3As a consequence, African

countries were encouraged and supported to create an investment friendly environment

so as to “market” their attractions and to smooth the pathway for incoming investors.

In the case of Nigeria, foreign direct investment has been a pivotal government policy

even before her attaining political independence in 1960. This situation has for long

stimulated a great desire and need for the reappraisal of the already existing legal

framework on foreign investment against the background and the need for a larger

foreign investment development in Nigeria.

1 UNIDO, (2008): United Nation Industrial Development Organization Report

2 Syed Akhter, Foreign Direct Investment in Developing countries: The Openness Hypothesis and Policy Implications, The International Trade Journal, Vol. 7. (1993)

3 Op.cit UNIDO, (2008)

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There is in existence legal framework for regulating foreign direct investment in

Nigeria, but how effective these frameworks have been in the promotion of foreign

investment has continued to be a subject of varying economic and academic opinions in

different circles. Although the various institutional and legal mechanisms have long

be


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