Investment In Nigeria Research Articles

Market Opportunities and Profitability of Tree Crop Planting in Nigeria

Investing in trees offer financial and social returns for years to come and it is a lucrative long-term investment in Nigeria. Despite the substantial gain on investment in tree planting, only few people are still involved in the business. This paper analyzed the profitability of investment in tree crop planting for income generation. Benefit Cost Ratio (BCR) and Net Present Value (NPV) were calculated to determine the financial viability of tree crop planting. The study showed that tree crop planting is a profitable business as shown by positive NPV of ₦2,187,822.0 and N2, 782,214.97 for Tectonia grandis and Moringa oleifera plantations respectively, after 10-years of maturation and harvesting at 14 % discount rate with a B/C Ratio of 1.97 and 1.6 respectively. Also, NPV of N1, 575,487.10 for a 5-year small scale private nursery establishment with a B/C Ratio of 2.79 at a 14% discount rate also confirm that the investment on nursery establishment is highly profitable. It is recommended that with adequate support and incentives, farmers can take advantage of these opportunities and invest in nursery enterprise and tree crop sub-sector of the economy
 Keywords: Market opportunities, Tree planting, BCR, NPV

Analysis of the influence of interest rate on money supply and investment in Nigeria: a vector error correction model (VECM) approach

The research analyzed the influence of interest rate on money supply and investment in Nigeria. It specifically analyzed the influence of working capital, return on investment, earning per share and gross operating profit on interest rate in Nigeria. Data was extracted from the Annual financial report of a manufacturing company using both descriptive research method and covariance while Autoregressive Distributed Lag Model (ARDL) and Vector Error Correction Model (VECM) were used to analyze the relationship which exist among the variables. The result of the findings showed that there is cointegration which implies aa long run relationship among the variables. The result revealed that Earning Per Share (EPS) had no significant impact on interest rate manufacturing firms in Nigeria. Furthermore, the result depicted that gross operating profit has a significant and positive impact on interest rate of manufacturing firms in Nigeria. The research recommends that financial managers increase their money supply and ensure that it is properly managed in order to enhance their investment, thus strengthening firm profitability. Furthermore, we suggest that financial managers should increase investment in working capital to accelerate their productivity so that they can also improve the profitability of the firms.

The impact of major macroeconomic variables on foreign direct investment in Nigeria: evidence from a wavelet coherence technique

Utilizing Nigeria as a case study, the investigators explored the linkages between FDI inflows and some selected macroeconomic indicators (exports, gross capital formation, trade openness, inflation, and economic growth) utilizing yearly data spanning between 1981 and 2018. The study used ARDL technique to capture the linkages between FDI inflows and its determining indicators. Furthermore, the wavelet coherence techniques was used. The main novelty of wavelet coherence is that it can obtain information on dynamic correlation and/or causality between economic variables at different frequencies and different time periods. Additionally, the FMOLS and the DOLS are employed as a robustness check to the ARDL long-run estimation. The findings from the ARDL long-run estimate reveal that exports and trade openness exert positive impact on FDI inflows. The findings from the FMOLS and DOLS backed ARDL results. Furthermore, the results of the wavelet coherence-based causality and wavelet correlation techniques further provide supportive evidence to the ARDL technique. To the authors' knowledge, no previous studies have used the wavelet coherence and wavelet correlation techniques to explore these dynamics. Based on these findings, policy directions were initiated.

COST – BENEFIT ANALYSIS FOR NIGERIAN NATURAL GAS PIPELINE INVESTMENT

This paper performs cost-benefit analysis of a pipeline infrastructure project based on a given natural gas demand in order to estimate the net present value and payback time for natural gas pipeline investment in Nigeria. The result of the cost-benefit analysis indicates a positive net revenue and net present value (NPV) at the current regulated transport cost and availability factor for gas pipelines in Nigeria. However, with a payback period of 14 years, a natural gas pipeline project in Nigeria is likely to lose-out investment capital to other competing investments within the oil and gas sector. Scenario analysis indicates that by doubling the regulated transport cost with a 50% tax reduction, the pipeline investment results in a much higher NPV and a payback of 4 years, which is more acceptable to investors.

The Short and Long Run Determinants of Foreign Direct Investment in Nigeria

What determines foreign direct investment inflows has been a subject of controversy among scholars. As a result of the highlighted gap discussed in this study, the short and long run determinants of foreign direct investment and their effects on foreign direct investment inflow in Nigeria was investigated from 1986 to 2018. Data were analyzed with Augmented Dickey-Fuller and Phillips Perron unit root test, Autoregressive Distributed Lag and Pairwise Granger Causality techniques. Evidence of long run dynamic equilibrium relationship was established between foreign direct investment and its determinants. The short and long run coefficients revealed that government capital expenditure and inflation impede the inflow of foreign direct investment both in the short and long run while exchange rates serve as a bane to foreign direct investment in the long run. However, gross domestic product and trade openness were found to stimulate the inflow of foreign direct investment in the short and long run. The Pairwise causality result revealed that government capital expenditure, exchange rate and trade openness had independent causality with foreign direct investment while gross domestic product and inflation rate had unidirectional causality with foreign direct investment. Thus, the government should allocate more funds for the provision of enabling and investment enhancing the environment to promote foreign direct investment inflow. The study added value to previous studies by estimating the short and long run determinants of foreign direct investment using the more dynamic and robust technique of Autoregressive Distributed Lag developed by Peseran and Shin (1999).

Studying Determinants of Foreign Direct Investment in Nigeria: An Empirical Investigation

This research paper investigated the determinants of foreign direct investment inflow into the Nigerian economy. This is because Nigeria at present is still characterized by low economic growth, which has created other macro-economic problems like inflation, low export, unemployment, unfavorable exchange rate, balance of payment disequilibrium, etc. The study adopted the Autoregressive Distributed Lag (ARDL/Bounds testing) econometric tool to examine the determinants of foreign direct investment (FDI) in the Nigerian economy. Data for the analysis are annual data covering the period 1981-2019, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin several issues. The study used inflation rate (INFR), interest rate (INTR), exchange rate (EXR) and trade openness (TOPN) as independent variables. While foreign Direct Investment (FDI) was used as the dependent variable. The result indicates that exchange rate (EXR) and trade openness (TOPN) are all positive determinants of FDI in the Nigerian economy as their corresponding coefficients are positive. The result further shows that for the Nigerian economy to attract FDI significantly by one percent, exchange rate and trade openness will increase by 0.18 and 5.00 percent respectively. On the other hand, inflation rate (INFR), and interest rate (INTR) are negative determinants of foreign direct investment in Nigeria. Meaning that, an attempt to increase either of these variables would result to a decline in foreign direct investment in the country and vice versa. We therefore conclude that both EXR and TOPN had a positive and significant impact on the FDI inflow to the Nigerian economy, and are therefore adjudged positive determinants of FDI inflow into the Nigerian economy within the period 1981-2019. INFR and INTR on the other hand maintained their negative influence on FDI inflow to the Nigerian Economy, hence, are negative determinants of FDI inflow into the Nigerian economy within the period 1981-2019. Finally, we recommend that government should sustain its drive for import substitutions which will encourage export, expand its bilateral trade ties with developed economies so as to woo FDI inflows. Also, government through it monetary authorities should reduce inflation and interest rates. This will help to woo FDI inflow into the Nigerian economy.

Foreign Direct Investment in Nigeria for Promoting Poverty Reduction: Taking the Right Lessons and Avoiding the Wrong Lessons

Foreign Direct Investment in Nigeria for Promoting Poverty Reduction: Taking the Right Lessons and Avoiding the Wrong Lessons

Sensitivity of Foreign Direct Investment to Monetary Policy Dynamics in Nigeria

Due to the recent slowdown in foreign direct investment in Nigeria, this study considered it necessary to look at the monetary policy dynamics of Nigeria to ascertain if there are gaps in transmission processes. The study made use of annual data from 1988 to 2019 on Foreign Direct Investment (FDI) and four other monetary policy variables; Liquidity Ratio, Monetary Policy Rate, Prime Lending Rate and Degree of trade Openness collected from the globaleconomy.com and Central Bank of Nigeria Statistical Bulletin to examine the relationship between Foreign Direct Investment (FDI) and monetary policy dynamics using Autoregressive Distributive Lags. The major findings are; that monetary policy rate and degree of trade openness have negative and significant relationship with foreign direct investment, while liquidity ratio and prime lending rate insignificantly relate to the foreign direct investment. However, since monetary policy rates is disclosed to significantly but negatively relate to foreign direct investment, the central bank of Nigeria should reduce further the rate in order to woo foreign investors to do more business in Nigeria. Again, since globalization and trade liberalization have totally removed the issue of countries being in the state of autarky (closed economy), most of the beggars thy neighbours policies should be discarded at least to enhance the degree of trade openness. The Central Bank of Nigeria should also conduct the monetary policy with the aim of encouraging foreign investment in Nigeria. Keywords: FDI, Monetary Policy, ARDL, Nigeria DOI: 10.7176/RJFA/11-16-06 Publication date: August 31 st 2020

Water Resource Management, Quality and Climate Change in Nigeria

Nigeria is endowed with natural water resources abundantly, the country has substantial annual rainfall, large water bodies such as rivers, streams, lakes etc. and abundant groundwater reservoirs which are least developed and utilized which resulted in economic, social, environmental and health costs, such as a high rate of premature mortality and morbidity resulting from contamination of consumption, pollution of environmental and environmental resources, pollution and overexploitation of ground and surface water resources and low income and productivity. Therefore, enabling citizens with access to potable water is paramount. Although conjugate or integral water management or monitoring inhabited with limited studies even in Nigeria where over 57% of the population rely on groundwater source the management approaches is practically scanty while integral water use studied extensively, the study recognized the integrated water resources managements (IWRM), internationally recognized principles to support the effort of ensuring robust policy framework and appropriate investments in Nigeria’s fresh water resources to enable the citizens with unlimited access to portable water.

Interrelationship Between Fiscal Deficit, Aggregate Savings and Investment: A Test of Ricardian Equivalence Hypothesis in Nigeria

Conflicting results on the relationship between government fiscal deficit, savings and investment behaviour of households remains unresolved. Some authors have argued that households might unconsciously play out adherence to the dictates of the Ricardian equivalence hypothesis (REH) because they practice an infinite consumption horizon. Relying on the vector autoregression (VAR) technique and the impulse response function (IRF), this study examines the validity of the REH and the interactions between fiscal deficit, aggregate savings, and private investment in Nigeria within a 48-year period. The results reveal that government fiscal deficit exerts negative effects on gross domestic savings and investment, which is further affirmed by the impulse response function (IRF). These findings rather uphold the neoclassical literary arguments that economic growth is retarded due to crowding out effects resulting from fiscal deficits; hence opposing the REH. Thus, policy-makers should adhere to the fiscal deficits benchmark of less than 40 percent of GDP as proposed by the International Monetary Fund (IMF) to maintain stable macroeconomic conditions.
 JEL Classification: E62, E21-E22, E23

Energy Consumption and Foreign Direct Investment in Nigeria: A Structural Break Analysis

Abstract The study analyses the structural break impact on the relationship between energy consumption and foreign direct investment in Nigeria from 1970 to 2015. The study accounts for the structural break and estimates the short-run and long-run relationship between energy consumption and foreign direct investment using ARDL estimation technique and Bai-Perron Least Squares Break Point. It was observed from the findings that a strong long-run cointegrating relationship exist between energy consumption and foreign direct investment with and without structural break. The structural break test reveals a break period of 1995 which supports the occurrence of oil price review by OPEC in 1995. Also, the ARDL estimate result revealed that energy consumption, trade and exchange rate adversely attract foreign direct investment, while GDP positively attract foreign direct investment both in the short-run and long-run in Nigeria. The study concludes that even though Nigeria’s GDP is trending towards attracting FDI into the economy, energy consumption, trade and exchange rate obstruct the attraction through the additional cost incurred as a result of imbalances in the variables. A major recommendation from the findings is that energy policies need quick re-visit in Nigeria. However, they will - due to the pressure exerted by the constant growth of the population, i.e. on the demand side, demand inflation will constantly manifest.

Fiscal Policy and Foreign Direct Investment in Nigeria

The study analyzed the effect of fiscal policy on foreign direct investment as well as the impact of Foreign Direct Investment on economic growth in Nigeria over the period of 1981-2017. The main type of data used in this study is secondary; sourced from various publications of Central Bank of Nigeria, such as; Statistical Bulletin and Annual Reports. The regression analysis of the co-integration is the estimation technique that is being employed in this study to determine the relationship between and impact of the fiscal policy on Foreign Direct Investment as well as the impact of Foreign Direct Investment on economic growth. The findings revealed that corporate income tax as fiscal indicators has a positive effect on foreign direct investment and government expenditure as a fiscal indicator has a negative effect on foreign direct investment. It also revealed that foreign direct investment have a significant impact on economic growth, it is further revealed that corporate income tax and interest rate and exchange rate have a negative and significant relationship on economic growth. Government expenditure and inflation have a positive and significant relationship impact on economic growth. This implies that foreign direct investment is an engine of economic growth. The paper recommended that the government should ensure a strict fiscal policy discipline and also government need to demonstrate high level of commitment to selectively choosing investors so as to favor the economy and not investor's selfish interest as this will promote economic growth. The project work is further recommended for further study.

Empirical analysis of agricultural and non-agricultural exports’impact on infrastructural investment in Nigeria

Empirical analysis of agricultural and non-agricultural exports’impact on infrastructural investment in Nigeria

Taxation and Tax Incentive Defined: Promoting the Inflow of Foreign Direct Investment in Nigeria through Taxation

In a world where a waxing number of governments contend emulously to attract multinational companies, fiscal policies have become a global phenomenon. Taxation as a critical fiscal policy measure poses as a veritable tool for magnetizing participation, otherwise conceptualized in this context as foreign direct investment (FDI), which has been used by several countries in the world to further their economic objectives. The paper in adopting a qualitative research method, examines the sensitivity of direct investment in Nigeria to taxation practices. The paper highlights that the tax incentive policy of the Nigerian tax system is a good driver of investment in Nigeria. While the efficacy of taxation remains questionable, the paper whilst in conclusion recommends a justifiable level of fiscal incentives, and a stable political and economic climate as a panacea in achieving the desired effect.

What Type of Investment Does Digital Finance Promote: Speculative or Non- Speculative?

This study was set to investigate the elasticity of digital finance to foreign investment correlates in Nigeria. The quest was triggered by the need to determine whether or not foreign flows act as enablers for the development of digital finance. To determine the order of integration and ensure the stationarity of the variables used, we performed the traditional Augmented Dickey-Fuller (ADF).Using web-based transaction value as a proxy for digital finance, the baseline ARDL estimates show that foreign investment flows proxied by FDI, FPI and Loans act as drivers for digital finance. Web based transaction was found to be a positively significant function of foreign portfolio and foreign loans with different coefficient of elasticity. Foreign direct investment on the other handdid not significantly affect the dependent variable over the studied period. We established co-integration following Pesaran, Shin and Smith (2001) test for co integration by using the Bound Test results. The coefficient of the Error Correction Mechanism (-0.22) is negatively significant, which implies that 22 percent of the errors in the model are corrected annually. The ECM suggests that web-based transactions adjust to the speed and dynamics of investment drivers in Nigeria within the studied period. FPI and Loans were significant. Digital finance is promoting FPI and not FDI which is not healthy. Government should review her policies on investments and pay attention to essential ingredients for boosting investments in Nigeria like ease of doing business, security and corruption.

GAS PIPELINES IN NIGERIA: SINE QUA NON FOR ECONOMIC DEVELOPMENT

The study reviewed the gas pipeline development in Nigeria and outlines needed strategies needed for sustainable development of gas pipeline for socio-economic development in Nigeria. There is inefficient gas pipeline development framework in Nigeria, based on the existing monopoly of the Nigerian Gas Processing and Transportation Company Limited (NGPTC) managing 1,500 to 2,000 km of gas pipeline all over Nigeria, while this is grossly inadequate to meet the domestic supply obligation. Extensive review of related literature was employed to obtain relevant data and information on the Nigerian gas pipeline. The study shows that gas pipeline is inadequate and additional 5,000km is required to meet the short and medium need, while about 10,000km gas pipeline will be needed in the long run. The study further revealed that gas is major source of revenue as N72.7 billion was generated from between 2017 and 2018. The study also reviewed the eight (8) critical gas infrastructures identified by the federal government of Nigeria, of which Obiafu-Obrikom-Oben (OB3) Pipeline Project and AjaokutaKaduna-Kano (AKK) Pipeline Project has the final investment decision taken and are at construction and detailed engineering phase respectively. The proposed strategy to enhance gas pipelines development in Nigeria should be private sector driven and divestment of all existing gas pipeline infrastructure to private investors in order to ensure sustainable management that would increase the Gross Domestic Product (GDP), create employment and provide access to relatively clean energy. There is also need to have a gas pipeline transmission and distribution act that would stipulate the minimum requirement for gas pipeline investment in Nigeria.

Uncovered Interest Rate Parity and Investment: A Tripartite Analysis of Nigeria, United States of America and China

This study comparatively examined the validity of the theory of uncovered interest rate parity (UIP) for Nigeria and United States of America (USA) and for Nigeria and China, using USA and China as anchor countries respectively. The study also examined the impact of the theory (UIP) on investment in Nigeria. Using annual time series data spanning from 1980-2017, the pre-estimation test (Augmented Dickey-Fuller Unit root test) was conducted. Given that the variables were integrated of order one and order zero, Autoregressive Distributed lag bound testing approach (ARDL) and Toda- Yamamoto causality test were employed for analysis. The ARDL result indicates that there is no long run relationship between Nigeria and USA but there is a long run relationship between Nigeria and China. By implication, the theory of UIP does not hold between Nigeria and USA but between Nigeria and China, the theory of UIP holds. Also, the result of Toda-Yamamoto indicates that the theory of UIP positively and significantly impacts on investment in Nigeria. The study recommended that the government should strengthen her economic relationship especially with China so as to encourage more investments by China in Nigeria.

IMPACT OF INTEREST RATE DEREGULATION ON INVESTMENT GROWTH IN NIGERIA

The study examined the impact of interest rate liberalization on investment in Nigeria from 1961 to 2017 using error correction model (ECM) and variance decomposition of vector autoregressive model. The empirical findings of the study showed that interest rate liberalization has no significant impact on investment in Nigeria. The result further showed that prime lending rate had a negative insignificant impact on investment in Nigeria both in the pre and post liberalization period. Private sector credit and Nominal exchange rate were also observed to be insignificant factors explaining variations in investment in Nigeria. However, national income and government expenditure exerted a positive and negative significant impact on investment respectively. The study therefore recommended that government through the Central Bank of Nigeria should use her monetary policies to influence interest rate in such a way as to stimulate investment growth in the country instead of allowing it to be freely determined by the market forces as the theory on liberalization suggests. Keywords: Interest rate, Investment, Nigeria JEL Classifications : E43, E22 DOI: https://doi.org/10.32479/ijefi.9260

Insurance Sector Development and Foreign Direct Investment in Nigeria

Aims: The study examined the impact of insurance sector development on foreign direct investment in Nigeria.
 Study Design: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets.
 Place and Duration of Study: Department of Banking and Finance, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria. The study was carried out between November 2019 to January 2020.
 Methodology: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets. The time series data was estimated using the least square technique.
 Results: The results indicates that; the total asset size of the insurance sector exerts a negative and statistically insignificant impact on foreign direct investment inflow to Nigeria, total insurance business investment exerts a positive and statistically insignificant impact on foreign direct investment inflow to Nigeria and finally, total insurance premium exerts a negative and statistically significant impact on foreign direct investment inflow to Nigeria.
 Conclusion: The study concludes that insurance sector development does not attract foreign investment inflow to Nigeria. The study recommends that the insurance sector should be revamped in order to absorb risk and uncertainty and be a vehicle for risk transfer and minimization. A policy of restructuring would help instil public confidence, boost insurance policy sales, increase insurance premium and invariably increase the availability of investible funds to boost economic activity. The study suggests that these would help attract foreign direct investment to meet domestic funding needs of Nigeria.

Monetary Policy and Domestic Investment in Nigeria: The Role of the Inflation Rate

Abstract Economic theory suggests that monetary policy can be used to stabilize an economy. However, the ability of monetary policy targets—interest rates and money supply—to stabilize an economy depends on their ability to achieve price stability. Using data from 1981 to 2018 and applying the vector error correction model, this paper seeks to determine how the changes in the inflation rate affect the ability of monetary policy tools to stabilize the Nigerian economy and stimulate investment. Empirical results suggest that the impact of the interest rates on investment depends on the level of the inflation rate. The size of the effect of interest rates on investment gets weaker as the inflation rate increases suggesting that monetary policy tools, such as the monetary policy rate (MPR), that directly change the interest rates are robust stabilization tools during periods of declining inflation rates but not relevant during periods of rising inflation rates. This is attributable to low bank lending rates. Additionally, the impact of the money supply target on investment does not depend on the level of the inflation rate. This suggests that monetary policy tools, such as open market operations, that directly change the money supply can be relevant stabilization tools during economic booms and recessions. As a result, the Central Bank of Nigeria should work to deepen the scale, capacity, and efficiency of its open market operations by ensuring that most of the people can participate with minimal transaction cost and by making different financial instruments available.