The Role of the Rule of Law in Attracting Foreign Investment for Infrastructure Development in Nigeria

Abstract

Effective and adequate infrastructure is a crucial substructure of any thriving economy, and infrastructure investment is regarded as a key driver of economic development. Nigeria, despite being regarded as the largest economy in Africa, and having one of Africa’s largest natural gas and crude oil reserves (amongst other natural resources), can hardly lay claim to a “thriving economy”. Foremost amongst the problems of Nigeria’s economy is the devastating lack of critical infrastructure to utilize its natural endowments and this, amongst other shortcomings, has seen Nigeria become the world’s “poverty capital”. Speculated to require approximately US$ 30 billion in annual investments to bridge the infrastructure deficit of its economy, Nigeria’s government is ill-equipped to finance such an infrastructure revolution and has thus resorted to private-sector partnerships and foreign investment as a solution. However, Nigeria has struggled to attract the much-needed private infrastructure investment. This paper will highlight a key reason for the apparent apathy of foreign investors towards committing finance to Nigerian infrastructure projects – the state of the rule of law in Nigeria, as it is one of the more foundational challenges which can be readily addressed by the Nigerian government. After illustrating Nigeria’s rule of law shortcomings and the effects of same on attracting investment, this paper will proffer strategies towards addressing these shortcomings in order to attract foreign investment for critical infrastructure.