FOREIGN DIRECT INVESTMENT (FDI) INFLOW IN NIGERIA – INCENTIVES AND OPERATING CONDITIONS

Positive developments have occurred in Nigeria since May 1999 when democracy replaces the spate of military government. This has resulted in a number of spirited move to attract investors-local and foreign –into the country. The president, Olusegun Obasanjo I. a bid to achieve this end, embark on a globe trotting that saw him interacting with other fellow presidents and the business communities of different countries.

With a more relaxed taxing system, incentives and the creation of Nigeria investment promotion commission (NIPC). The country was set to lure private sector finance. As a first step, the government took a bold move to privatize all the ailing public enterprise; decree No.25 of July 1996 backs this scheme. The government set up Bureau of public enterprises (BPE) to oversee the crucial venture and the national council on privatization (NCP) headed by the vice-president to formulate pragmatic polices in this area.

INCENTIVES AND OPERATING CONDITIONS            

            Most of the empirical evidence supports that notion that specific incentives such as lower taxes have no major impact on FDI. Particularly when they are seen as compensation for continuing comparative disadvantages. On the other hand, removing restrictions and proving good business operating condition are generally to have good positive effects. In China, the open-door policy and enhanced incentives for investing in special economic zones contributed to initial influx of FDI. Further incentives, such as the granting of equal treatment to foreign inventors in relation to local counterparts and the opening up of new markets (e.g. air transport, retailing and banking) have been reported as important factors in encouraging FDI in recent years.

            the Indian government has recently relaxed most of the regulations regarding foreign investment. This is seen as contributing to the increased FDI flows in the last couple of years. However, the lack of transparency in investment approval procedure and an extensive bureaucratic.

            System are still deferring foreign investors, hence relatively FDI/ GNP ratio. In 1991, Bangladesh and Pakistan implemented reforms allowing foreign investors to operate with 100 0/0 ownership but still failed to attract significant flow (as a proportion of GNP) because of political instability and an over-extended bureaucracy. Nigeria in contract continue to attract foreign investment as an oil exporting country despite its erratic and relatively in hospitable polices. With regard to the remaining low income countries. With small FDI inflows, survey indicates that lack of clear-cut policy with respect to foreign investment and excessive delays in the approval procedures are among the important deterrents. Although, a number of African countries set up one-stop investment shops during the 1980 in order to simplify approval procedure, the increased work roads created bottlenecks.