Investment In Nigeria Research Articles

Analysis of Factors Inluencing Public Capital Investment in Nigeria

There are several factors that affect successful execution of public capital projects in every economy. This study specifically investigates the influences of selected macroeconomic factors such as: inflation, exchange rate, total expenditure, population, debt servicing and Real GDP on government capital investments using data that cover a period from 2000 to 2017. Using ordinary least squares technique, the findings reveal that Real GDP and population have insignificant negative impact on capital investments, while debt servicing has a significant negative influence on government capital expenditure. Inflation rate does not exert any influence but exchange rate and total expenditure have significant positive impact on capital expenditure. The implication is that a lot of funds go into debt servicing, thereby denying the masses of adequate infrastructural provisions. Due to poor funding of local industries, they lack the capacity to affect the economy positively such that the size of the Real GDP is negatively influencing the public capital investment. Therefore, the study has made some recommendations which could help our policy makers in their decision to ensure that investment in capital projects and infrastructures in the country is given the basic consideration to achieve its economic objectives. Above all the domestic industries and agriculture should be well financed since inflows from them can help to carry out more capital projects and reduce the country’s level of borrowing.

Revisiting Government Expenditure and Private Investment Nexus: An ARDL Approach

This paper re-examines the nexus between government expenditure and private investment in Nigeria over the period of 1981-2016. The study is rooted on Jorgenson’s theory of investment, the Samuelson’s version of the flexible accelerator theory and Keynesian-classical crowding-in/crowding-out theory of investment. The resulting empirical models comprise three equations; one each for private investment (PI), private domestic investment (PDI) and foreign direct investment (FDI). The study employed Autoregressive Distributed Lag technique to estimate the models. From the study, government expenditure showed positive impact on private investment in Nigeria. Our specific findings showed that: Federal government’s capital expenditure (CAEX) showed positive and significant impact on both PI and PDI in the long run: a N1.00 billion each increase in CAEX increases PI and PDI by N0.12 and N0.238billion respectively. CAEX showed negative but insignificant impact on FDI in both short and long run. State government’s capital expenditure (SCEX) showed positive and significant impact on PI: A N1.00 billion increase in SCEX increases PI by N0.27 billion. Federal government’s recurrent expenditure (REEX) showed positive and negative impact on FDI and PI respectively: A N1.00 billion increase in REEX increases FDI by N1.27 billion, and reduces PI by N0.28 billion. Our findings imply that, if the objective of government policy is to raise private investment or private domestic investment, then both the Federal Government and state governments should boost their capital expenditure.

Sensitivity of Real Estate Investment Return to Market Return Index: The Case of Nigerian Real Estate Investment Trusts

Abstract The level of sensitivity of every investment option to a market index is crucial to investors. Sensitivity analysis of individual or a set of returns on investments to market return index predicts the reaction of the investment(s) to changes in the market index; informs investors of prospective performance of different investments types; as well as assists the investors in making appropriate decisions on investment selections. This paper assessed how sensitive indirect real estate investments in Nigeria were to market index. The three companies whose asset returns were considered in this study were real estate investment trusts listed in the Nigerian Stock Exchange. The data used in this study were sourced from annual reports of the listed companies, and reports of the Nigerian Stock Exchange. The beta coefficients were used to determine the sensitivity of the selected stocks to market return index. The study found a very low and insignificant beta coefficient among various real estate investments and market return index. Hence, there is no relationship between the market return index and the returns on the Real Estate Investment Trusts listed in the Nigerian Stock Exchange.

Musings on the legal framework for resolution of foreign investment disputes in Nigeria

Resolution of dispute arising from foreign investments in Nigeria is achieved through non-judicial and judicial mechanisms, otherwise known as arbitration and litigation in courts. Foreign investors are expected to seek redress using one of the aforementioned mechanisms. Although the principles of public international law seem to be in contention with the business interests of an investor and the host country, there has been a rapid growth and development in investment arbitration as a trade dispute resolution mechanism in the past years, and the courts in Nigeria, through her decisions, have made pronouncements regarding the disputes from foreign investments. Consequent to this, it has become critically important for investors, solicitors, professional service providers and trainers, to understand the intricate legal elements involved in the resolution of disputes involving foreign investment. This study examines the legal framework for resolution of foreign investment disputes in Nigeria. Concepts such as nationalisation and expropriation of foreign investments, stability clauses and foreign investment disputes, renegotiating and the stability of contractual agreement as well as legal infrastructure were discussed and fully analysed.

An econometric analysis of the impact of taxation on domestic investment in Nigeria

An econometric analysis of the impact of taxation on domestic investment in Nigeria

Tax revenue and private domestic investment: Evidence from Nigeria

This paper investigated the impact of tax revenue on private domestic investment in Nigeria from 1980 to 2018 using the modified ordinary least squares- Autoregressive distributed lag (ARDL). The paper used oil revenue, non-oil revenue, and Corporate Income Tax (CIT) as the independent variables while Private Domestic Investment (PDI) is the dependent variable. Oil revenue and non-oil revenue were used as a proxy for oil and non-oil tax. These data were obtained from secondary sources- central Bank of Nigeria, World Bank database and Federal Inland Revenue service statistical bulletin. The result showed that a long-run relationship exists between the aforementioned variables. Also, the paper revealed that oil and non-oil do not have a significant impact on PDI but CIT has a positive and significant impact on PDI. The paper recommends that proper measures/reforms should be put in place in order to reduce the impact of tax on private domestic investment in Nigeria.

The impact of remittances on household investment in Nigeria

The impact of remittances on household investment in Nigeria

Effect of Financial Liberalization on Savings and Investment in Nigeria

In Nigeria, measures were taking by government between the period 1986 to 2005 to liberalise the financial sector as part of the overall structural adjustment programme (SAP) with the aim to promote economic growth and alleviate poverty. The financial reform assumes that deregulating the financial market will eliminate the distortion and fragmentation of the financial market. It will also improve the mobilisation of savings as well as efficiency in allocation of funds to viable investment projects in the economy. This in turn will help in accelerating economic growth. Literature in the area posits that liberalising interest rate and deepening of the financial market is growth enhancing. This hypothesis is tested by identifying two basics channel through which financial liberalisation is operational - savings and investment, and allocative efficiency. The analysis was carried out using macro data from Nigeria by employing Two-Stage-Least Square (2SLS) instrumental variable technique to analyse the data. Major findings pointed out that interest rate as determinant of savings is not statistically significant, and rising interest rate negatively affect investment growth. Secondly, investment follows the standard accelerator theory. Furthermore, growth in the stock of money is positively related with investment but statistically insignificant. Lastly, there is a considerable deepening in the banking sector, however, the capital market does not positively impact on the allocation of credit in the economy. Perhaps investment in the market is more of speculation that crowd out investment in the real sector thereby retrogressing the economic growth. The study recommends that government intervention is necessary for rapid and sustainable economic growth in the country especially policies like income policies and interest rate regulations as well as policies that smoothen consumption in the economy. Also, policy makers should focus on stabilising the economy to reduce the macroeconomic uncertainties especially exchange rate and inflation volatility, that impede the growth of private investment.

Tax revenue and private domestic investment

This paper investigated the impact of tax revenue on private domestic investment in Nigeria from 1980 to 2018 using the modified ordinary least squares- Autoregressive distributed lag (ARDL). The paper used oil revenue, non-oil revenue, and Corporate Income Tax (CIT) as the independent variables while Private Domestic Investment (PDI) is the dependent variable. Oil revenue and non-oil revenue were used as a proxy for oil and non-oil tax. These data were obtained from secondary sources- central Bank of Nigeria, World Bank database and Federal Inland Revenue service statistical bulletin. The result showed that a long-run relationship exists between the aforementioned variables. Also, the paper revealed that oil and non-oil do not have a significant impact on PDI but CIT has a positive and significant impact on PDI. The paper recommends that proper measures/reforms should be put in place in order to reduce the impact of tax on private domestic investment in Nigeria.

Capital Flight and Domestic Investment in Nigeria: Evidence From ARDL Methodology

Capital flight is a challenge for many developing countries of the world. The problem is more severe in a nation like Nigeria where domestic investment has been terribly affected. This study undertakes an empirical investigation of the impact of capital flight on domestic investment in Nigeria between 1980 and 2017. Deploying the Auto Regressive Distributed Lag (ARDL) econometric methodology, the study finds that capital flight has negative and significant impact on domestic investment. In particular, the long run impact of capital flight on domestic investment (0.57) turns out to be more severe than its impact in the short run (0.27), implying that a continuous and persistent build-up of capital flight exerts a negative cumulative effect on domestic investment over time. The study further reveals that the quality of institutions in Nigeria is a disincentive to domestic investment. It therefore recommends the strengthening of institutions to rein in on the illegal outflow of capital from the Nigerian economy in order to guarantee the availability of investible funds. The real sector of the local economy must be grown to bolster the value of the naira. This will stem the tide of capital flight and attract investments into critical sectors.

DOES TAXATION HAS IMPACT ON INVESTMENT? AN EMPIRICAL RESPONSE FROM CO-INTEGRATION ANALYSIS

ABSTRACTThis study examined the effect of taxation on investment in Nigeria from 1970 to 2018. Relevant secondary data were obtained from Central Bank of Nigeria (CBN) Statistical Bulletins and Federal Inland Revenue Services Bulletin from 1970 to 2018. Regression analysis technique, Units root test, Johansen co-integration, Vector Error-Correction Model, and Granger causality tests were employed to determine the long run relationship and causality links among the variables. Results showed that PPT and Value added tax had positive significant impact on INV both in the short run and in the long run while Company income tax, and Custom and Excise duties impacted INV negatively. It is concluded that all components of taxes had positive significant impact on investment in Nigeria except corporate income tax. Corporate income tax had negative significant impact on investment both in the short run and in the long run.

Exchange rate volatility and foreign portfolio investment in Nigeria

The study examines the link between exchange rate volatility and foreign portfolio in Nigeria using data that covers the period 1996Q1 to 2016Q4. The theoretical framework used is the return and creditworthiness model, which is based on the push and pull factors theory. In achieving the objective, the study adopted the vector autoregressive model in ascertaining the dynamics between exchange rate volatility and foreign portfolio investment in Nigeria. Also, the study examines the impact of exchange rate innovations (shocks) on foreign portfolio investment and equally assesses how induced variations in foreign portfolio investment are decomposed among the variables in the model. It was also found that exchange rate volatility and market capitalization significantly and largely explain the variations in foreign portfolio investment. The impulse response analysis shows that foreign portfolio investment was more responsive to standard deviation shocks in market capitalization and exchange rate, implying that these variables were more responsible for the dynamism in FPI. As the horizons expand, shocks to market capitalization and exchange rate increase foreign portfolio investment, whereas shocks to GDP and inflation made foreign portfolio investment dwindle. In the same manner, in decomposing the induced variation in foreign portfolio investment, forecast error shocks in market capitalization, exchange rate and GDP explain more of the variation in foreign portfolio investment.

Taxation, exchange rate and foreign direct investment in Nigeria

This paper investigates factors that may impact foreign direct investment in Nigeria. It seeks to establish the role of taxation (corporate tax) for foreign direct investment in Nigeria. Annual time series data derived from the Central Bank of Nigeria statistical bulletin and the United Nations Conference on Trade and Development covering a period of 31 years (1985–2015) were used for this study. The variables considered in the study include FDI, corporate tax, exchange rate, inflation rate, real gross domestic product (RGDP). They were analyzed using Ordinary Least Squares (OLS), Johansen Co-Integration model and Unit Root Test. Findings from this research observed that a negative relationship exists between corporate taxation and FDI. Also, the study observed that corporate tax have a significant impact on FDI and there exists a long-run relationship between the two variables.

Foreign Direct Investment and Tax Revenue Performance in Nigeria (1987-2016): Terrorism-Effect

The study argued that terrorism exhibited negative effect on the interaction between foreign direct investment (FDI) and tax revenue performance in Nigeria from 1987-2016. An econometric model was formulated and hierarchical regression analysis conducted. Jarque-Berra test indicated that the series are normally distributed meaning that the data were robust, appropriate and met goodness of fit standard. The results revealed that the interaction between FDI and Tax revenue performance (-75213.95 and probability 0.000) was negatively moderated by Terrorism with the Adjusted R2 0.9098 and F-stat 95.144. Recommendation was anchored on nationwide security improvement to increase tax returns, tax payment, and foreign investors’ confidence on investment in Nigeria.

Foreign Direct Investment and Tax Revenue Performance in Nigeria (1987-2016): Terrorism-Effect

The study argued that terrorism exhibited negative effect on the interaction between foreign direct investment (FDI) and tax revenue performance in Nigeria from 1987-2016. An econometric model was formulated and hierarchical regression analysis conducted. Jarque-Berra test indicated that the series are normally distributed meaning that the data were robust, appropriate and met goodness of fit standard. The results revealed that the interaction between FDI and Tax revenue performance (-75213.95 and probability 0.000) was negatively moderated by Terrorism with the Adjusted R2 0.9098 and F-stat 95.144. Recommendation was anchored on nationwide security improvement to increase tax returns, tax payment, and foreign investors’ confidence on investment in Nigeria.

Where Is the Foreign Direct Investment in Nigeria’s Electric Power Sector?

The main objective of the Nigerian electric power sector reform was to catalyse private sector investment in the sector. In essence, the reform involved the liberalisation and deregulation of the then wholly government owned and managed electric power sector. This was essential to augment whatever government funds were available for the upgrade of the country’s collapsing electricity infrastructure. The idea was to attract majority of the investment from overseas. However, after the initial divestment of some of the government owned successor companies, it became apparent that majority of the investors in the assets were local Nigerian businesses; very few foreign investors were attracted to the nascent Nigerian electricity market. This same scenario played out again a few years later, when the government conducted the sale of additional thermal plants under the National Integrated Power Project (NIPP). On this occasion, not only did the foreign investors not show up, local investors also refused to pay for the assets. Worryingly too, there have been very few green field assets built by private sector investors since the conclusion of the electricity reforms. This paper seeks to understand the reasons for the apathy shown by foreign investors and most recently local investors to the Nigerian electricity sector. The paper suggests options for turning the situation around and encouraging the much desired private sector investment in the sector.

The portfolios of insurance investments and private sector growth in Nigeria (1990-2018): investigating the nexus

The study investigated the portfolios of insurance investments and private sector growth in Nigeria; for the period (1996-2018). Private sector output is taken as the dependent variable to measure the private sector performance; whereas, cash deposits, government securities and bill of exchange are employed as the independent variables to measure portfolios’ insurance investments in Nigeria. Hypotheses formulated were tested using Ordinary Least Squares (OLS) technique. The study revealed a significant relationship between cash deposit and Gross Domestic Product in Nigeria. Government securities has a significant relationship with Gross Domestic Product in Nigeria. Bill of exchange has a significant relationship with Gross Domestic Product in Nigeria. The coefficient of determination indicated that about 64% of the variations in private sector growth can be explained by changes in insurance industry variables in Nigeria. The study concluded that the portfolios insurance investments significantly contributed to the growth and development of the private sector economy. The study recommends that policy makers should pursue an all-inclusive growth promoting financial system. Awareness should be increased to raise the level of patronage. Relevant agencies like the Police and the Federal Road Safety Commission should prosecute unlicensed and uninsured vehicles. Insurance companies should adopt faster methods of processing claims to enhance their image and patronage. Keywords: Insurance, Investment Portfolio, Private Sector Growth, Nigeria

Determinants of Foreign Direct Investment in Nigeria

Determinants of Foreign Direct Investment in Nigeria

Government Capital Expenditure and Private Sector Investment in Nigeria: Co-integration Regression and Toda-Yamamoto Causality Analysis

This paper analyses the relationship between government capital expenditure and private investment in Nigeria using time series data spanning from 1981 to 2016. Government capital expenditure was disaggregated into different components and ADF unit root test was employed to establish the stationarity properties of the variables in the model. The result of Johanson co-integration test revealed that the variables have long run relationship. Co-integration regression results suggested that capital expenditure on physical assets and defense displaced private sector investment while government capital expenditure on human capital and public debt servicing promote private sector investment in Nigeria. Furthermore, the results of T-Y causality revealed the bidirectional causality private sector investment and government capital expenditure in Nigeria. Based on these findings, the paper recommends that government capital expenditure should be channel to human capital in order to promote private sector investment in Nigeria. In addition, the Nigerian government should pay more attention to capital expenditure on physical assets since it has a significant impact on private sector investment. Lastly, Nigeria government should address the issue of budget delay, corruption, and mismanagement in Nigerian institutions.

Taxes and Foreign Direct Investment (FDI) in Nigeria

This study examines the relationship between the different forms of taxes collected and foreign direct investment in Nigeria. The study adopted the ex-post facto research design and covers a period of thirtyfour years from 1982 – 2015. Secondary data were analysed using the Autoregressive Distributed Lag (ARDL) regression technique. The study found that there is a negative and significant relationship between taxes collected in the form of National Information Development Fund and Education Tax and Foreign Direct Investment. Also, that there exists a positive and significant relationship between Value Added Tax, Companies Income Tax and Foreign Direct Investment, while Petroleum Profits Taxes and Custom and Excise Duties do not influence Foreign Direct Investments in Nigeria. Based on the findings, the study recommends that there is need for government to come up with more friendly economic policies such as tax incentives and macroeconomic adjustments that will enhance continuous increase and growth of the nation's GDP and by implication, attracts FDI into Nigeria.