Africa's economy is growing rapidly and Nigeria occupies a key place in this exponential growth. As the most populous country in Africa, the seventh most populous country in the world and reading available statistics on the growing rate of foreign investments in Nigeria and the future of the Nigerian economy, it is not out of place to conclude that Nigeria is a strategic market for all manner of foreign investments. Nigeria is renowned for her abundant mineral resources and her oil reserves have brought great revenues to her. Nigeria’s promising outlook for investment and future growth has been recognised among the Next Eight economies, as one of the countries with the potentials to becoming one of the largest economies in the 21st century alongside the leading emerging economies of Brazil, Russia, India and China. Nigeria is largely a free market. The Government of Nigeria is gradually taking its hands off several sectors of the economy and there have been very serious talks about deregulating almost all sectors of the economy and various incentives that have been put in place to encourage investments. However there are certain legal issues under the political factor of a business environment that commonly arise and questions that often come up when foreign investors seek to invest in Nigeria. Nigeria’s laws, polices as well as treaties regarding such things as trade and tariffs regulate the entry of firms, performance of firms and survival of firms within its business environment which is of considerable importance to foreign investors. Nigeria is seen as an emerging market with great potentials, but unlike advanced economies, emerging markets suffer from weak institutions. This dissertation gives advance warning of some lurking problems, it is hoped that any prospective investor will be patient with the running of the course of government approvals, and accept with equanimity as yet unknown surprises and legal challenges. However the prospective investor should know that, in spite of the layers of bureaucracy, the Nigerian government is committed to attracting foreign investment and technology. In view of the current austerity programs, it is doubtful that additional incentives will be made available. This dissertation examined the legal gamut and framework governing foreign investors setting up a business in Nigeria. It highlights the regulatory bodies, processes and procedures that must be followed in obtaining business licences and permits; a critical analysis of the Laws of the Federation of Nigeria affecting foreign direct investment and elucidating on the incentives available to foreign investors coming to do business in Nigeria. This paper further discussed two points which are essential to an understanding of Nigerian law, government and practice. One is the good intentions of the government in encouraging foreign investors through incentives. Incentives provided for setting up a business for the purpose of foreign direct investment should be juxtaposed with the bureaucracy involved in getting these incentives. The second point which one must understand about Nigeria is the difference between the written law and practice. What the law says is not as meaningful as the way in which it is applied. Any government bureaucracy worthy of its existence tends to follow unique interpretations of the law, and the Nigerian ministries are no exception. Accordingly, an attempt is made to sort out the illusion of written laws and policy from the substantive ways Nigerian officials apply them and how it affects the performance and management of organisations. To do this a research study was carried out, the research focused on the legal and regulatory framework governing Dogan Nigeria Ltd. Dogan Nigeria Ltd is a European invested company for the purpose of producing quality sugar products in Nigeria. The company is a subsidiary of Ata Ltd. Co.; Ukraine's biggest and market leader cube sugar manufacturing company with more than 70% market share. The qualitative research method is employed describing in details specific situation using interviews as a research tool. The major limitations of this methodology are the issues of confidentiality and anonymity which pose problems during presentation of findings. The inductive approach is used to analyse the data gotten from the respondents using thematic content analysis method. From the analysis of the data, it is seen that there is a significant negative relationship between weak (legal) institutions and high profit, there is also a significant negative relationship between arbitrary change of the law and efficient organizational performance and there is a significant positive relationship between an economy with less political risk and high diversification of organization into that economy. The study also highlights the legal risk faced by foreign investors and the organisation as a result of the country’s weak institution, such risks are corruption, slow judicial system, change in laws and government policies, political unrest and insecurity and lack of infrastructure.
Read full abstract
Oct 30, 2024
Onodugo Ifeoma Joanes + 2
Open Access
