The Effects of Domestic Taxes on Foreign Private Investment in Nigeria.


The enabling environment created through generous fiscal policies is expected  to increase the level of foreign private investment in Nigeria beyond the present level.

However, on the contrary what is witness are divestments cum capital flight out of the country. It is therefore, in line with the above, that this study seeks to examine the effect of tax incentives on foreign private investment in Nigeria.

Therefore, the objectives of the study, was to examine the extent to which tax incentives have impacted on foreign private investment in Nigeria, to examine the impact of tax rate on aggregate foreign private investment in  Nigeria and to examine the relationship between tax rate and foreign private investment in Nigeria.

The research adopted the ex post facto research designed which utilised secondary data. The study covers the period 1970 – 2007.

The ordinary least square(OLS) regression analyses was adopted in testing the hypotheses where the dependent variable was foreign private investment(FPI) while the independent variable was incentive tax rate(ITR), and Normal Tax rate(NTR).

The result as revealed from the tested from the hypotheses was that tax incentives rate in Nigeria does not have a positive significant impact on foreign private investment;

Normal tax rate does not have significant impact on foreign private investment and there is no positive relationship between tax rate and foreign private investment in Nigeria.

Therefore, in line with the findings, the study recommends that the federal government of Nigeria should seek more avenues to increase foreign private investment in Nigeria like increased infrastructure facilities and creating an enabling environment for foreign private investment in Nigeria.


Title Page
Title page
Table of Content
List of Tables

Chapter One: Introduction

1.1 Background To The Problem
1.2 Statement Of The Problem
1.3 Objectives Of The Study
1.4 Research Questions
1.5 Research Hypotheses
1.6 Scope And Limitation Of The Study
1.7 Significance Of The Study
1.8 Operational Definition Of Terms

Chapter Two: Review of Related Literature

2.1 Highlights of Nigerian Taxes
2.2 Fiscal Incentives for Attracting Foreign Investment
2.3 Foreign Private Investment In Nigeria
2.4 Types of Foreign Private Investment
2.5 Analysis of Non-Financial Factors That Influence the Flow of FPI

Chapter Three: Research Methodology

3.1 Preamble
3.2 Research Design
3.3 sources of Data
3.4 Method Data Collection
3.5 Model Specification

Chapter Four: Presentation and Analysis of Data

4.1 Introduction
4.2 Presentation of Data
4.3 Test of Hypotheses

Chapter Five: Summary of the Findings, Conclusion and Recommendations

5.1 Summary of Findings
5.2 Conclusions
5.3 Recommendations


1.1 Background of the Problem

Over the past two decades, most government have been actively promoting their countries as investment locations to attract scare private capital and associated technology and managerial skills in order to help achieve their development goals.

They have increasingly adopted measures to facilitate the entry of Foreign Private Investment (FPI).

Examples of such measures include liberalizing the laws and regulations for the admission and establishment of foreign investment; providing guarantees for repatriation of investment and profits; and establishing mechanisms for the settlement of investment disputes. Tax incentives are also part of these promotional efforts.

The role of incentives in promoting FPI has been the subject of many studies, but their relative advantages and disadvantages have never been clearly established.

There have been spectacular successes as well as notable failures in their role as facilitators of FPI. As a factor in attracting FPI, incentives are secondary to more fundamental determinants, such as market size, access to raw materials and availability of skilled labour.

Investors generally tend to adopt a two stage process when evaluating countries as investment locations. In the first stage, they screen countries based on their fundamental determinants.


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Aremu J.A. (1997) “Foreign Private investment: issues, determinants, Performances and promotions” Lagos: market link Communications.

Aremu J.A (2005) “Attracting and Negotiating Foreign Direct Investment With Transnational Corporation in Nigeria” Lagos: market link Communications.

CBN (1995) “Central Bank of Nigeria, Economic and Financial Review” Vol 35 No 3

CBN (2007) “Statiscal Bulleting” Central Bank of Nigeria Annual Publication.

Erdal D. and Mahmut M. (2008), “Determinant of Foreign Direct Investment Flows to Developing countries: cross s sectional Analysis” Prague Economic Papers

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