Free Student Projects: Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of Telecommunications Sector

 

1. INTRODUCTION

The need for foreign capital to supplement domestic resources is being felt by the developing

economies, in view of the growing mismatch between their domestic capital stock and capital

requirements. This is evidenced in the new attention being given to the drive for foreign capital

especially in developing economies. Fosu and Magnus (2006) and Omisakin, et al. (2009) pointed out

rightly that foreign capital inflow is an important vehicle for augmenting the supply of funds for

domestic investment. Ngowi (2001) also argued that African countries and other developing countries

need a substantial inflow of foreign capital to fill the saving and foreign exchange gaps associated with

a rapid rate of capital accumulation and growth needed to overcome the widespread poverty in these

countries. Besides, developing countries are preferred to developed countries by foreign investors

because of the higher rate of return on investment in these countries (Ghose, 2004; Knill, 2005, Vita

and Kyaw, 2008). However, whether the foreign investors are willing to take advantage of this high

rate of return in the face of high production cost and distorted investment incentives is another issue

entirely.

The relative advantage(s) of Foreign Direct Investment (FDI) as a productivity-enhancing package is

now widely acknowledged in the literature. Fosu and Magnus (2006) stressed that foreign capital

investment can stimulate local investment by increasing domestic investment through links in the

production chain. Ghose (2004) noted that foreign direct investment contributes to economic growth

in developing countries through two channels; one of which is externalities in the form of positive

productivity spillovers to domestic enterprises. Dauda (2007) also noted that foreign capital

investment increases the Gross Domestic Product and generates a stream of real incomes in the host

country, which consequently expands employment, raises wages and salaries, lower commodity

prices, increase tax revenue accruable to the government. Alfaroa, et al., (2004) found that although

foreign direct investment alone plays an ambiguous role in contributing to economic growth,

countries with well-developed financial markets gain significantly more from it.

Despite the aforementioned benefits of foreign direct investment in the host country, a number of

authors have argued against it in the literature. For instance, Busse and Hefeker (2005) argued that

foreign investments run the risk of sudden reversal if the economic environment or the perception of

investors change, giving rise to financial and economic crises. Alfaro and Chanda (2003) argued that

the potentials of foreign capital investment could be severely impeded if there is the absence of well-developed financial markets, which is widely the case in African countries. Adam (2002) hinted that

foreign direct investment that exhibits market seeking motivations might create distortions in the host

economy through monopolies and high barriers of entry. UNCTAD (2005) observed that foreign

investment in Africa has advanced much further and faster than integration internally, especially in

structural, institutional and policy trends, and in some cases at its expense.

The acknowledged benefits of the foreign direct investment seem to be more than the demerits, and

this seems to explain the current move of developing countries including Nigeria, seeking to attract

private foreign direct investments by removing the structural barriers and encouraging foreign

investors. Such encouragement includes offers of incentives such as income tax holidays, import

duties exemptions, and subsidies to foreign firms. In an apparent shift of long-held stance against

foreign direct investment, the Nigerian government, like other developing nations introduced the

Structural Adjustment Programme (SAP) comprising a package of economic policy measures in 1986.

To reinforce the gains of the economic policy measures and further encourage foreign participation in

the economy, the Nigerian Investment Promotion Decree was promulgated in 1995 to encourage,

promote and coordinate foreign investment and enhance capacity utilisation in the productive sector

of the economy. It also provides an opportunity for foreign participation in Nigerian enterprises up to

100 per cent ownership. However, the full deregulation of the telecommunication sector was not

implemented until 2001.

1.1.Statement of the Problem

Over the years, successive Nigerian governments have viewed foreign direct investment as a vehicle

for political and economic domination of Nigeria and hence the thrust of government policy

(indigenisation policy) through the Nigeria Enterprise Promotion Decree (NEPD) has been to regulate

foreign direct investment, with a maximum of 40% foreign participation allowed. This has resulted in

a decline in both private and foreign investment and has therefore slowed down growth in all sectors

of the economy including the telecommunications sector. This has consequently reduced long-run

levels of per capita consumption and income. The trend had been attributed to the debt crisis and

global shocks which affected the country in the 1980s, and which has set off a protracted period of

macroeconomic instability with an eventual drop in external financing. This, therefore, discouraged

foreign participation in the economy as foreign direct investment formed only a small percentage of

the nation‟s gross domestic product (GDP) though marginally rising from –0.80% in 1980 to 1.80%

in 1990. In an attempt to create a suitable climate for investment and growth within the economy, and

to stimulate her economic recovery efforts from a prolonged and severe recession, the Nigerian

Government introduced the Structural Adjustment Programme (SAP) comprising a package of

economic policy measures in July 1986.

The programme incorporates trade and exchange reforms reinforced by monetary and fiscal measures,

which are geared towards diversifying the mono export base by stimulating domestic production and

discouraging use of improved inputs for local production. The supply side of the package seeks to

enhance aggregate output with special emphasis on agro/agro-allied and manufacturing sectors for

which specific policy measures were designed. The implementation of SAP was expected to bring

about some improvements in the economy. For instance, the sharp exchange rate depreciation was

expected to discourage importation and make multinationals that have profited through export trade

(from the former over-valuation of the Naira) to prefer investment in the domestic economy if they

were to maintain their established trade links. But all these were not achieved due to improper

implementation of the programme.

1.2.Objectives of the Study

The main objective of this research is to examine the impact of foreign direct investment on sectoral

performance in the Nigerian economy with special reference to the Telecommunications Sector.

Specifically, the research intends to find out the following:

i. The trend of foreign direct investment in Nigeria‟s Telecommunication sector;

ii. To find suitable strategies that would stimulate foreign direct investment into the

telecommunications sector of the Nigerian economy.

iii. To identify the determinants of foreign direct investment in Nigeria.

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

Telecommunications Sector

1.3.Research Hypothesis

The research hypothesis that would be tested in the course of this study is stated below:

H0: There is no positive relationship between foreign direct investment and the performance of the

the telecommunications sector in Nigeria.

H1: There is a positive relationship between foreign direct investment and the performance of the

the telecommunications sector in Nigeria.

2. LITERATURE REVIEW

2.1.Theoretical Review

Several economic theories attempted to evaluate the role of FDI in the country both from a positive and

negative point of view. Economic theories like neo-classical theory, dependency theory, and

endogenous growth model theory are going to be considered as basic points of discussion.

Neoclassical perspective is based on a basic principle in economics, which suggests that economic

growth requires capital investment in the form of long-term commitment (Adams, 2009). It simply

means that this theory creates a better relationship between the FDI and economic development of

every society, most in particular, developing countries.

The second theory to be considered is dependency theory; According to Aremu (2005), dependency

the theory maintains that the poorness of developing countries is due to imperial neglect;

overdependence upon primary products as exports to developed countries; foreign investors„

malpractices, particularly through the transfer of price mechanism; foreign firm control of key economic

sectors with the crowding-out effect of domestic firms; implantation of inappropriate technology in

developing countries; introduction of the international division of labour to the disadvantage of

developing counties; prevention of independent development strategy fashioned around domestic

technology and indigenous investors; distortion of the domestic labour force through discriminatory

remuneration; and reliance on foreign capital in form of aid that usually aggravated corruption.

Furthermore, the dependency theorists also focused on several ways by which, FDI of

multinational corporations distort developing nation‟s economy. Some scholars of this theory believed

that distortive factors include the crowding out of national firms, rising unemployment related to the

use of capital-intensive technology, and a marked loss of political sovereignty (Umah, 2007). It has

also been argued that FDI are more exploitative and imperialistic in nature, thus ensuring that the host

country absolutely depends on the home country and her capital (Anyanwu, 1993). This theory from

its points of analysis could be discovered that it creates a negative relationship between FDI and

the economic growth of the developing countries. The theory is of the great belief that the economic

involvement of developed countries into developing nations under multinational companies and FDI

will surely resort to the economic disadvantages of developing nations.

The last theory to be considered is endogenous growth models theory; while neoclassical theory

assumes the notion that long term investment is a great determinant of the economic growth of the

country, endogenous growth model theory explained that physical investment is not a measure of

the economic growth of a country but the effectiveness and efficiency in the use of these investments.

Economic models of endogenous growth have been applied to examine the effects of FDI on

economic growth through the diffusion of technology (Barro, 1991). Romer (1990) argues that FDI

propels economic growth through strengthening human capital, the most essential factor in R&D

effort; while Grossman and Helpman (1991) emphasize that an increase in competition and innovation

will result in technological progress and increase productivity and, thus, promote economic growth in

the long run. From the analyses made under this theory, it can be discovered that the theory suggests a

better relationship between the FDI and economic growth of the developing countries.

2.2.Benefits of Foreign Direct Investment

Over the past two decades, FDI has been one of the most important driving forces for the world‟s

economic growth. According to the US Department of Commerce, FDI is a direct investment which

“implies that a person in one country has a lasting interest in and a degree of influence over the

management of, a business enterprise in another country.” The US Commerce Department defines

FDI as “ownership or control by a foreign person of 10 per cent or more of an enterprise's voting 

securities or the equivalent,” which is deemed enough to influence management decisions. At a

Global Investment Forum hosted by the United Nations Conference on Trade and Development

(UNCTAD), it was reported that “there was a strong feeling among ministers from some developing

countries that more research and analysis was needed about the critical issues at stake in a multilateral

framework on investment...and many speakers stressed the complexity of the issues related to the

effects of economic policy liberalization on the quantity, quality and distribution of FDI, and its

impact on development.”

Requiring sufficient economic information and abundant funds, foreign investment is always

accompanied by higher risks. With such risks, foreign investment also comes with the possibility of

much greater returns. Traditionally, foreign direct investment has been very closely related either with

a trade or with an international development agency. Most current foreign investment thus has either

been the result of someone taking a huge risk or the result of an international organization such as the

World Bank underwriting that risk. Meanwhile, international developmental agencies often pursue the

the more enlightened goal of helping countries develops properly rather than seeking the greatest return.

The benefits of foreign direct investment include promoting economic growth, technology transfer

and job creation in the local economies. It is assumed that exports would increase since a large part of

exports is comprised of shipments from domestic companies to their foreign affiliates. Technology

transfer from foreign investment projects will improve the efficiency of local firms as well. These

effects become the major attractions for developing and underdeveloped countries seeking foreign

direct investment. In addition, FDI can serve to integrate domestic markets into the global economic

system far more effectively than could have been achieved only by traditional trade flows. The

benefits from FDI will be enhanced in an open investment environment with a democratic trade and

investment regime, active competition policies, macroeconomic stability and privatization and

deregulation. Under such conditions, FDI can play a key role in improving the capacity of a country to

correspond to global economic integration and future national developmental strategies.

In practice, the greater the openness and freedom toward FDI, the more economic reforms and

potential benefits that receiving countries will reap. Although FDI implicitly brings large economic

benefits and potentially attracts numerous business opportunities, many countries are only partially

open to foreign investment or even refuse business with foreign enterprises. Those countries believe

they will be losing control power over the local economy by inviting foreign investment.

They often use performance requirements such as exporting requirements or technology transfer

agreements to control the categories and sizes of FDI. For many countries, performance requirements

on foreign investment were considered necessary and desirable to ensure that the activities of foreign

capitals are consonant with local countries‟ developmental strategies (Thompson, 1999). The same

decline ineffectiveness can be seen in terms of policies designed to maximize the potential benefits

from inward investment. However, since it has been acknowledged that FDI can stimulate economic

growth and national development, there remains a tremendous diversity in countries‟ approaches on

their policies towards FDI. Countries can also screen incoming investment and retain control of

foreign participation in particular sectors. Those measures are designed to certify local government

can still retain the final decision on economic policies and ensure the foreign investment will not cause

negative effects on national development.

2.3.Determinants of Foreign Direct Investment

This section focuses on a review of foreign direct investment determinants. These are the factors that

determine foreign direct investment inflows into a given geographical location, say, a country or a

region. They give investors the confidence needed to invest in foreign markets. The list of these

determinants may be very long, but not all determinants are equally important to every investor in

every location at all times. Some determinants may be more important to a given investor in a given

location at a given time than to another investor. A given determinant may be a necessary and

satisfactory factor by itself for foreign direct investment inflow in one location but not in another. For

the most part, they form a complementary set. What interests us in this section is to find out the

factors that would motivate or attract a multinational enterprise (MNE) to invest in a particular

destination after making the decision to go multinational. These are the factors that give the investors

the confidence to commit their normally massive, expensive and scarce resources in a given foreign

destination. 

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It is difficult to determine the exact quantity and quality of foreign direct investment determinants that

should be present in a location for it to attract a given level of foreign direct investment inflows. What

is clear is that every location must possess a certain critical minimum of these determinants before

foreign direct investment inflows begin to take place.

UNCTAD‟s 1998 World Investment Report presents some host country determinants of foreign direct

investment. These include:

Policy Framework for Foreign Direct Investment:

i. Economic, political and social stability.

ii. Rules regulating entry and operations (of foreign direct investments).

iii. Standard of treatment of foreign affiliates.

iv. Policies on functioning and structure of the markets.

v. International agreement on foreign direct investment.

vi. Privatization policy.

vii. Trade policy (tariffs and non-tariff barriers and coherence of foreign direct investment and

trade policy.

viii. Tax policy.

Economic Determinants:

i. Business facilitation.

ii. Investment promotion (including image-building and investment-generating activities and

investment –facilitating services).

iii. Investment incentives.

iv. Hassle costs (related to corruption and administrative efficiency).

v. Social amenities (for example bilingual schools, quality of life.

vi. After-investment services.

UNCTAD (1998) lists the principal economic determinants in host countries. It matches types of

foreign direct investment by motives of the firms with those principal economic determinants. Where

we have a market-seeking type of foreign direct investment, it looks for criteria concerning market

size and per capita income; market growth; access to regional and global markets; country-specific

consumer preferences and; the structure of markets. In the case of foreign direct investment of a

resource/asset- seeking type, the focus would turn on raw materials, low-cost unskilled labour as well

as skilled labour, technological, innovative and other created assets (like brand names), and physical

infrastructure (ports, roads, power, telecommunications).

There is another type of foreign direct investment: one that is directed at ensuring efficiency. This

the type looks for favourable balances in the costs of resources and assets listed above, adjusted for labour

productivity as well as in other input costs, such as transport and communications costs to/from and

within the host economy. Finally, it is interested in whether or not the host economy is part of a

regional integration agreement that may be conducive to the establishment of regional corporate

networks.

Given that foreign direct investment is increasingly geared to technologically intensive activities,

technological assets are becoming more and more important for Trade Nation Cooperation‟s (TNCs)

to maintain and enhance their competitiveness. A destination‟s possession of a strong indigenous

technology base is vital for attracting high-technology foreign direct investment and for research and

development (R&D) investments by TNCs. A would-be host country, in order to attract scarce foreign

direct investment, must be able to provide the requisite inputs for modern production systems. For

example, the efficiency-seeking foreign direct investment will tend to be located in those destinations that

are able to supply a skilled and disciplined workforce and good technical and physical infrastructure.

Bjorvatn (1999) says that firms will locate their industrial activities in countries with superior quality

of national infrastructure. A good quantity and quality of infrastructure in a location is among the

factors that facilitate business operations. Physical infrastructure includes roads, railways, ports and

telecommunications facilities. The latter include traditional postal services and modern

communication facilities such as the network Internet.

Regional Trading Blocks (RTBs) are essential determinants of foreign direct investment. These

represent various forms of economic integration among countries. They are designed to promote

cross-or inter- country trade and mobility of factor services from within member countries by

fostering a more market-oriented pattern of intra-regional resource allocation. They have the potential

to increase the size of a unified market. Common external tariffs imposed by RTBs are likely to force

non- members to enter the market through foreign direct investment rather than through trade. This is

one of the ways in which RTBs may be among the essential foreign direct investment determinants.

No wonder then that the European Union as a group attracts so much foreign direct investment. The

importance of regional groupings as a factor in attracting foreign direct investment has also been

advocated by the UNCTAD. The organization argues that countries stand to reap some economies of

scale in regional groupings and that it develops complimentarily of interests between land-locked and

coastal countries. In the African context, such economic groupings as the Economic Community of

West African States (ECOWAS) and the Southern African Development Corporation (SADC) may be

Language and business culture are also determinants of foreign direct investment inflows. In a

destination where a language like English is commonly spoken by the majority of the population, one

would expect more foreign direct investment inflows than if the case were otherwise. Of course, we

have cases where there has been more foreign direct investment inflow to destinations where language

is, on the surface, a barrier, e.g., South Korea, Indonesia, Taiwan and China than to where language

seems to be an advantage as in most African countries like Nigeria where English is widely spoken.

Tax exemptions, tax holidays or tax reduction for foreign investors, and similar incentives would play

a positive role in attracting foreign direct investments into a given destination. Some other types of

incentives that may play similar roles include guarantees against arbitrary treatment in case of

nationalization; government provision of such utilities as water, power and communication at

subsidized prices or free of cost; tariffs or quotas set for competing imports; reductions/elimination of

import duties on inputs; interest rate subsidies; guarantees for loans and coverage for exchange rate

risks; wage subsidies; training grants and relaxation of legal obligation towards employees. But the

costs of these incentives to the host economy must be compared to the potential benefits that foreign

direct investment may bring.

Labor availability and relatively low labor costs, high skills, and efficiency are important factors

determining foreign direct investment inflow into a given destination. For example, the region

covered by the fifteen former communist states of Central and Eastern Europe is seen by some MNEs

such as Daewoo, as a low-cost production base that can be used as an export platform to service West

European markets. Relatively lower wage costs have also been used to account for increased foreign

direct investments in Asia especially in the Tigers of Asia. The labor force has to be non-militant.

There should be generally good labor relations, a low rate of industrial disputes, strikes and lockouts, and a high level of employee loyalty in a given destination for foreign direct investments to flow there

is a substantial amount.

Investors may also be attracted by other factors such as low cost but high-quality inputs and minimal

transaction costs in their interaction with the government and other bureaucracies. The extent to which

unnecessary, distorting, and wasteful business costs are reduced will most likely contribute positively

to foreign direct investment inflow into a given destination. The strength of a currency also may

determine foreign direct investment inflow. A relatively weak currency would be more likely to

attract foreign direct investments than a relatively strong one. Realizing potential losses inherent in

converting weak currency to hard ones, many foreign investors may simply plow back into the host

economy their profits and other remittances. Currency devaluation may lead to cheap assets. Cheap

assets, on the other hand, are expected to attract more foreign direct investments especially through

Mergers and Acquisitions (M&As).

Economic and structural reforms in a country are very important in winning foreign investors‟

confidence to take their investment funds there. Such reforms can be very wide and far-reaching. The

various reform measures may overlap with each other. Reforms, whether social, political, or economic,

should aim at creating, maintaining, and/or improving the environment for business, both local and

foreign. Some of the important reforms can involve the relaxation of entry restrictions in various

sectors, deregulation in various industries, the abolition of price controls, easing of controls over mergers

and acquisitions and trade practices, removal of government monopoly, privatization, independence

of the Central Bank, and elimination of import licensing, removal of foreign-exchange - rate and

interest rate controls. Such reforms are likely to create a business-friendly environment that is likely 

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

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to attract more foreign direct investment. But the reforms may be expensive to a nation and its people.

For these reforms to be justified, they must take into consideration the impact on the populace of the

country concerned.

Investors are more likely to choose those locations that make it easier to do business. These are likely

to be found in countries with solid economic fundamentals. The 1997 figure for developed countries‟

share of global foreign direct investment inflow (72%) most likely reflects the presence of the solid

economic fundamentals in the United States and some European countries. It has been argued that the

attractiveness of developing countries for foreign capital depends on the capabilities of these countries

to apply existing technologies and not on their role in producing a new ones. That is, foreign direct

investment inflow to such countries in the first place will depend on, among other things, the

existence of this capability. We may then list the ability to use the existing technology as yet another

factor that can determine foreign direct investment inflow into a specific destination.

Non-discriminatory treatment of investors, consistency, and predictability in government policies are

also among the foreign direct investment determinants. Investors need to be in a position where they

can plan their activities efficiently within the policy environment of the government. Those

government policies that directly or indirectly affect investments should be reliable, accessible, up to

date, and widely publicized. Government credibility is essential if the more foreign direct investment is to

flow to a destination. In this connection, the system of processing and approving new investments

may be a crucial determinant for further foreign direct investment inflow into the same destination. A

long bureaucratic, non-transparent, and corrupt process is likely to scare away potential investors.

What is needed is a relatively short, transparent and non-corrupt process undertaken in, if possible, a

one-stop-shop. Some other foreign direct investment determinants include positive economic growth

in a given destination.

Economic growth in turn determines market prospects. It is more likely that foreign direct investment

will flow more to destinations with promising economic growth both in the short and long run. Other

foreign direct investment determinants mentioned in the literature include low indirect social costs

like bribery or its absence; availability of risk capital; synergy between public and private research

and development programs; low rate or absence of criminality, alcohol and narcotic abuse as these

affect the security of personnel and the quality of the labour force as a whole. The values, norms and

culture of the population in the host economy must be ready to support the principle of free

competition. Authorities must be able to adjust policy to reflect new economic, social and political

realities of the time. Prevailing views on environmental issues and the occurrence of activism, while

important, must not be fanatical and detrimental to business operation. They must be reasonable.

Countries‟ health services, recreation possibilities and overall quality of life, too, influence foreign

direct investment inflow.

The presence of investment opportunities in a country, needless to say, is another important foreign

direct investment determinant. The opportunities should be made known to potential investors through

effective promotion, which includes marketing a country and coordinating the supply of a country‟s

immobile assets with the specific needs of targeted investors. One cannot always expect that investors

will take the trouble of finding out the available opportunities in every country. Countries must reach

out to investors. Where the world‟s largest TNCs invest is sometimes determined by access to

technology and innovative capacity in particular countries. These factors, in contrast to natural

resources, are called “created assets”. These include communication infrastructure marketing

networks, knowledge - which can be used as a proxy for skills, attitudes to wealth creation and

business culture, technological, managerial and innovative capabilities, competence at organizing

income-generating assets productively, as well as relationships (such as between firms and contracts

with governments) and the stock of information, and, finally, trademarks or goodwill. Possessing the

assets just adumbrated is critical for competitiveness in a liberalizing and globalizing world economy.

However, the traditional factors such as access to markets, natural and other resources like low-cost

labor are still key foreign direct investment determinants especially for many firms that have not yet

developed large-scale international operations. As mentioned at the beginning of this section one can

see that some of the determinants overlap. It is almost impossible to give a threshold of the

determinants that should exist in a location before a given amount of foreign direct investment begins

to flow there. But it is clear that a certain critical minimum of the determinants should exist before the

inflows start to take place. A location that possesses an optimal quantity and quality of the

determinants can be said to be an attractive destination for foreign direct investment. For a destination

to attract or increase its foreign direct investment share, it should possess this critical minimum of the

determinants.

2.4.Factors Affecting the amount of Foreign Direct Investment

Nigeria as a nation has some of inherent features, which made the nation unique in Africa as a

continent and in the world in general. The nation is blessed with enough natural resources to survive

on its own sufficiently but is still in battle of development up till tomorrow. There are numerous

challenges militating against the positive development of the nation, which could actually hinder the

nation to survive in some other aspects like attracting the foreign investors to come into the country.

The tremendous advantages of FDI to the economic growth of the developing countries have made it

official for every nation to try her best by making themselves an attractive ground for the foreign

investors to come into their nations. In fact some finding made it known that Pakistan„s ability to

develop is dependent upon the country„s effective capacity to attract the foreign investors. It is

however, important to discuss some inherent factors in developing countries, which could actually

affect the smooth inflow of FDI in the continent.

1. Political Instability: One of the major characteristics of African nations is incessant changing of

government, which usually come up as a result military intervention in government, ethnic crisis,

and frequent occurrence of war. According to Rogoff and Reinhart (2003) in their investigation

about how susceptible the region is to the occurrence of war within the year 1960-2001, had their

result based on the fact that the regional susceptibility to war index is 26.3% for Africa compared

to 19.4% and 9.9% for Asia and the Western Hemisphere, respectively. The study also made it

known that there is a statistically significant negative correlation between FDI and conflicts in

Africa. This emphasizes on the fact that, intervention of foreign businesses in the continent has no

relationship with the causes of war in the region. Political instability will surely hinder the inflow

of FDI in African countries.

2. Lack of Policy Transparency: The fact that political instability is one of the inherent features of

the continent precipitates that incessant changing of government will also lead to incessant

changing of policies. This automatically makes it difficult to actually predict what the policies of

governments are all about in African countries. The policy of increment in transaction cost, tax,

and rules and regulations would not be easy to measure by the foreign investors and this will make

the continent so risky for them to invest their businesses.

3. Unstable Macro-economic Variable: Effective presence of macroeconomic variable is one of the

basic determinants of FDI intervention in any country and when macroeconomic variables have

been destroyed or not put in place by any nation then it will affect the interest of FDI. The presence

of inflation, budget deficit, currency crashes, etc in African countries make the continent less

attractive to foreign investors. Recent evidence based on African data suggests that countries with

high inflation tend to attract less FDI (Onyeiwu and Shrestha, 2004).

4. Environmental Problem: It is a duty of foreign investors to find nations with better environmental

factors and which could enhance their investments. Climatic problem as a result of several harms

done to the African environment makes the continent so risky for foreign investments. Findings

made it known that in the past, domestic investment policies, for example, on profit repatriation as

well as on entry into some sectors of the economy were not conducive to the attraction of FDI

(Basu and Srinivasan, 2002).

5. Market Size and GDP Growth-Rate: One of the major factors that make the continent to be

termed developing countries‟ is their low GDP rate annually compare with other regions in the

world. The low GDP rate with relative small market size hinders the inflow of FDI in the region.

Elbadawi and Mwega (1997) show that economic growth is an important determinant of FDI flows

to the region.

6. Poor Infrastructure: This has been a very important topical issue in this research work where

infrastructural facilities have been measured in Nigeria compared with the level of interest of the

foreign investors looking at the various view of different authors. The relationship between

infrastructure and interest of the foreign investors in the country has been discovered contradictory

with each other. African countries in general lack proper and adequate infrastructure like

telecommunications, transport, power supply, professional labours, etc to facilitate the interest of 

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

Telecommunications Sector

International Journal of Humanities Social Sciences and Education (IJHSSE) Page | 67

Other investment opportunities in the industry include investing in any sub-sector of the industry such

as manufacture, and supply of equipment and accessories as well as service provision. The industry‟s

size and growth prospects are very high, thus making it a self-sustaining sector. With the deregulation

of the industry, private sector participation and operation is fully allowed in the telecommunications

undertakings.

However, only corporate bodies registered in Nigeria and/or Nigerian citizens can participate in

telecommunications service delivery. Foreign investment is encouraged through Joint Ventures

between the foreign investors and their Nigerian affiliates.

3.RESEARCH METHODOLOGY AND SOURCES OF DATA

The study intends to use econometric approach in estimating the relationship between foreign direct

investment in telecommunications and the economic growth of Nigeria. The dependent variable is the

contribution of the telecommunications sector to the gross domestic product while the independent

variable is foreign direct investment in the telecommunications sector of Nigeria. The Ordinary Least

Square (OLS) technique will be employed in obtaining the numerical estimates of the coefficient in

different equations using E-view 8.1 output. The OLS method is chosen because it possesses some

optimal properties; its computational procedure is fairly simple and it is also an essential component

of most other estimation techniques.

A simple linear regression model would be used in the estimation. The model seeks to examine the

impact of foreign direct investment in the Telecommunication sector on the performance of the sector

in Nigeria. The estimation period is restricted to the period between 1986 and 2014 due to the fact that

the country adopted liberalisation policy, which allowed foreign investment in the sector in 1986

under the Structural Adjustment Programme (SAP).

Secondary data is the basis of the data used in this study. They were sourced mainly from the

publications of the Central Bank of Nigeria (CBN), namely: CBN Statistical Bulletin, and CBN

Annual Report and Statement of Accounts etc. The variables for which data would be sourced

include: Foreign Direct Investment in the Telecommunications sector of Nigeria (FDIT), and

contribution of the Telecommunications sector to the Gross Domestic Product of Nigeria (GDPT).

3.1.Theoretical Framework

Mainstream economists suggest that the Foreign Direct Investment can benefit the real sector of an

economy in three broad ways (Parthapratim, 2006). First, the inflow of Foreign Direct Investment can

provide a developing country non-debt capital creating source of foreign investment. The developing

countries are capital scarce. The advent of foreign investment can supplement domestic saving for

improving the investment rate. By providing foreign exchange to the developing countries, Foreign

Direct Investment also reduces the pressure of foreign exchange gap for the Less Developed

Countries (LDCs), thus making imports of necessary investment goods easy for them. Secondly, it is

suggested by mainstream economists that increased inflow of foreign capital increases the allocative

efficiency of capital in a country. According to this view, Foreign Direct Investment can induce

financial resources to flow from capital-abundant countries, where expected returns are low, to

capital-scarce countries, where expected returns are high. The flow of resources into the capital-scarce

countries reduces their cost of capital, increases investment, and raises output. However, according to

another view, foreign investment does not result in a more efficient allocation of capital, because

international capital flows have little or no connection to real economic activity. The third and the

most important way Foreign Direct Investment affects the economy is through its various linkage

effects via the domestic capital market.

Foreign Direct Investment is positively correlated with economic growth is situated in growth

theory that emphasizes the role of improved technology, efficiency and productivity in promoting

growth. The potential contribution of Foreign Direct Investment to growth depends strictly on the

circumstances in recipient countries. Certain host country conditions are necessary to facilitate the

spillover effects.

The analysis of the effect of Foreign Direct Investment on economic growth in this study is based on

the augmented production function in which capital stock, labour and other endogenous factors jointly

determine the level of productivity. One of these endogenous factors is Foreign Direct Investment.

Foreign Direct Investment is regarded as an endogenous factor because it is attracted largely by the 

high rate of return on investment in developing countries (Ghose, 2004) and the liberalization policy

of these countries (Dauda, 2007). Therefore, the model that would be estimated in this study is stated

as below:

3.2.Model Specification

The main focus of this study is to examine impact of foreign direct investment on sectoral

performance in the Nigerian economy with special reference to the Telecommunications Sector. Thus,

the model specification is as follow:

GDPT =  (FDIT) 1

Mathematical Presentation of the Model

GDPT = β0 + β1FDIT + µ 2

Where:

GDPT = Contribution of the Telecommunications sector to the Gross

Domestic Product of Nigeria.

FDIT = Foreign Direct Investment in the Telecommunications sector of

Nigeria

β0 = Intercept of the function (constant term)

β1 = Regression coefficient

µ = Stochastic variable.

 Unit Root Test: Test of stationarity aimed at determining whether the variables have dependable

means and variances. The Augmented Dickey-Fuller unit-root test was used to test whether the

variables are stationary or non-stationary in levels, first or second differencing. Damodar (2005)

states that the essence of unit-root test is to allow both the levels and first difference of the relevant

variables to enter growth regression and as well as to avoid spurious regression and give accurate

results.

 Co-integration Test: Co-integration test is aimed at ascertaining whether there is long-run

relationship between the variables. The Johansen co-integration test will be employed to test for

the presence of first order auto-correlation and co-integration of variables in the model.

The R2

and adjusted R2

shall be used to measure the degree to which the explanatory variables are

responsible for the change in the dependent variable and the goodness of fit as a result of addition of

explanatory variables. The F-statistic shall be used to test for the linearity assumption at 5% level of

significance.

 Error Correction Mechanism (ECM): The purpose of error correction model is to indicate the

speed of adjustment from the short-run equilibrium to the long-run equilibrium state. The greater

the coefficient of the parameter, the higher the speed of adjustment of the model from the short-run

to the long-run equilibrium.

4.DESCRIPTIVE RESULTS

In the descriptive results, we analyze the time series characteristics of the chosen data during the

period of 1986-2014. We had undertaken some econometrics tests on the variables of our model to

ascertain their assumptions prior to estimation. Viz: Stationarity, Co-integration tests and Error

Correction Model (ECM).

4.1.Unit Roots Test

The Augmented Dickey-Fuller (ADF) unit-root test was employed to test for stationarity or the

existence of unit roots in the data. The results of the unit-root tests are presented below:

Table1. Augmented Dickey-Fuller (ADF) Test

Variables ADF-Statistic Critical Value Order of

1% 5% 10% Integration

GDPT -5.543084 -4.356068 -3.595026 -3.233456 1(1)

FDIT -5.184145 -3.699871 -2.976263 -2.627420 1(1)

Source: Author’s Computation (E-View 8.1 output).

The above empirical test shows that FDIT and GDPT are integrated of order one. They are integrated

of the same order; 1(1). From the above table, it it discovered that ADF with trend and intercept are 

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

Telecommunications Sector

International Journal of Humanities Social Sciences and Education (IJHSSE) Page | 69

integrated of the same order. Considering the ADF test statistics at 5% and 10% critical values, it is

observed that test statistics are greater than the critical values. Thus, the series are said to be stationary

at that first difference.

4.2. Johansen Co-Integration Test

A necessary but not sufficient condition for co-integrating test is that each of the variables be

integrated of the same order. The Johansen co-integration test uses two statistics tests namely; the

trace test and the likelihood eigenvalue test. The first row in each of the table test the hypotheses of no

co-integrating relation, the second row test the hypothesis of one co-integrating relation and so on,

against the alternative of full rank of co-integration. The results are presented in table 2 below.

Table2. Co-integration for Trace Statistic test

Hypothesized No. of CE(s) Eigenvalue Trace Statistic Critical Value 0.05 Prob.**

None* 0.979072 141.4607 15.49471 0.0001

At most 1* 0.833336 44.79442 3.841466 0.0000

Trace test indicates 2 co-integrating eqn(s) at the 0.05 level

*denotes rejection of the hypothesis at the 0.05 level

**Mackinnon-Haug-Michelis (1999) p-values

Source: Author’s Computation (E-view 8.1 Output)

In the model one and two above, the results of the co-integration test are reported here. The tracestatistic value is shown to be greater than the critical values at both 1% and 5% levels, thus indicating

2 co-integrating equation at both 1% and 5% levels respectively and model three indicating 2 cointegrating equation at both 1% and 5% level. The existences of co – integration suggest that there is a

long – run relationship between the variables under consideration. Having established co– integration

among the variables, we move on to the ECM which will help us to see the short –run dynamics of the

model. ECM will enable us determine the speed of adjustment from short – run to long – run

equilibrium.

Table3. The Result of Error Correction Model (ECM)

Dependent Variable: FDIT

Method: Least Squares

Date:01/09/16 Time: 08:47

Sample (adjusted): 1986 2014

Included observations 28 after adjustments

Variable Coefficient Std. Error t-statistic Prob.

C 895.2989 2933.440 0.305204 0.7627

GDPT 1.719686 0.211206 8.142205 0.0000

ECM(-1) -0.711577 0.204926 -3.472362 0.0019

R-Squared: 0.743572; F-statistic: 36.24655; Prob(F-statistic): 0.000000; Adjusted R-squared: 0.723057;

Durbin-Watson Stat: 2.422688

Source: Author’s Computation (using E-View 8.1 Output).

4.3.Interpretation of Regression Results

From the regression result, it is evident that there is a positive relationship between foreign investment

in telecommunications sector of Nigeria and the contribution of the sector to the Gross Domestic

Product (GDP) of the country. The observed relationship conforms with the A‟ Priori expectation.

Besides, a change in the explanatory variable, that is, foreign direct investment in telecommunications

sector of the Nigerian economy brings about a more proportionate change in the contribution of the

telecommunications sector to the Gross Domestic Product (GDP) in the same direction. This signifies

the fact that foreign direct investment in the Nigerian Telecommunication sector has impacted

positively and significantly on the performance of the sector in terms of its contribution to the growth

of the economy.

The standard error of the parameter estimate for foreign direct investment in the Telecommunication

sector of Nigeria (2933.440) is less than half of the parameter (447.64945), therefore the null

hypothesis would be rejected and the alternative hypothesis would be accepted. This indicates that the

parameter estimate is statistically significant in the determination of sectoral performance in Nigeria.

From the percentage points of the t-distribution, the theoretical t-value at a 5% level of significance

with twenty-three degrees of freedom is 2.05. Since the critical t-value is less than the calculated value (8.142205), we shall reject the null hypothesis and accept the alternative hypothesis. This means

that the parameter estimate that foreign direct investment in the Telecommunications sector of Nigeria

is statistically different from zero, that is, it is a relevant variable that affects the sectoral performance

of the Telecommunications sector of Nigeria to a large extent.

In this model the coefficient of determination gives 0.743572 or 74.4% approximately. This shows

that the regression model is 74.4% significant. That is, the variation in the contribution of the

Telecommunications sector to the Gross Domestic Product of Nigeria is about 74.4% attributable to

the changes in the foreign direct investment in the telecommunication sector of Nigeria.

The calculated F-value (36.24655) is greater than the critical F-value at 5% level of significance with

v1 = 1 and v2 = 27 (4.21). We shall therefore reject the null hypothesis and accept the alternative

hypothesis. This means that the overall regression or relationship between the foreign direct

investment in the Telecommunications sector of Nigeria and contribution of the Telecommunications

sector to the Gross Domestic Product of Nigeria is statistically significant and as such, the foreign

direct investment in the telecommunications sector of Nigeria is an important factor that determines

sectoral performance in Nigeria.

Then Durbin-Watson calculated in this model is 2.422688, this shows that, there is degree of positive

autocorrelation between the foreign direct investment in the telecommunications sector of Nigeria and

contribution of the telecommunications sector to the Gross Domestic Product of Nigeria.

The coefficient of error correction mechanism (ECM) is negative. This is in line with economic and

econometrics expectations. The error correction mechanism corrects 71% of the total error that occurs

in the model.

4.4.Impact of Foreign Direct Investment in the Telecommunications Sector of the Nigerian

Economy

On assumption of office in May 1999, the Olusegun Obasanjo administration swung into action to

make a reality the complete deregulation of the telecommunications sector, most especially the much

touted granting of license to GSM service providers. The government also put in motion the

privatization of NITEL. This proactive approach by the government and the telecommunication sector

had made it possible for over 87million Nigerians to clutch GSM phones today (CBN, 2010).

Since the liberalisation of the telecommunications industry in 2001, capital investments in mobile

networks and operations have constituted 80 per cent of overall investment going into the

telecommunications sector – a total of more than $12bn by the middle of 2008. Total figure for the

industry, as of March 2010, according to the Nigerian Communications Commission (NCC), reached

$18bn, of which $16bn is related to mobile.

There have been significant increases in the level of foreign direct investment in the Nigerian

telecommunications industry, especially since 1999. From a mere US$ 50 million at the end of 1999,

total private investment in the sector rose to about US$ 2.1 billion by the end of 2002, out of which

about 75% was attributable to mobile networks. At the end of 2003, total industry investment was

estimated at about US$ 3.8 billion. The industry investment was estimated at about $18 billion in

2009 (CBN, 2010).

Since 1999, Nigeria has demonstrated the highest potential for ICT investment in Africa; the NCC

reported 64 million SIMs in operation at the beginning of January 2009, with 23 million new

subscribers signing up in 2008. This growth of 55% in 2008 alone has encouraged a flurry of local

and multinational investors into the industry. In 2007, Telecommunications attracted the most private

participant investment in Africa (86% of total). Nigeria claimed the dominant share of the $9.5 billion

(reportedly the highest since 1990) at 28% ($2.66 billion) followed by South Africa at 11% ($1.045

billion).

Deregulation of the Nigerian Telecommunications system in 2001 gave way to private involvement

which in turn led to emergence of major players in the field - both local and foreign companies. These

include MTN, Zain, Etisalat, Globacom, Mtel, Multilinks, Reltel and Vizaphone. These providers

offer telecommunications services in the area of telephony service, Global System of Mobile

Communication Services (GSM), fixed wireless access and VSAT.

The explosion of the telecommunications sub-sector of Nigeria propelled by foreign investment, has

seen significant contribution to the growth and development of Nigerian economy. The banking and

finance sector is reaping the benefits of deregulation as the telecommunications sector is creating

more opportunities for investment. VSAT companies offering satellite-based services have also

become operational, providing support for online banking and funds transfer services in the country.

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

Telecommunications Sector

International Journal of Humanities Social Sciences and Education (IJHSSE) Page | 71

The level of investment in the country due to telecommunications liberalisation is currently valued at

about $18 billion. This is expected to rise with more operators coming on stream.

Foreign investments in the telecommunications sub-sector have also contributed to the creation of

jobs in the economy. Employment opportunities created in the country as a result of

telecommunications liberalisation is estimated to be in excess of 8,000 jobs. However, for a sub-sector

that has been in the limelight of the national economy in the past ten years, 8,000 jobs seems to be

paltry given the growing number of educated youths that needs jobs. The truth is that the sub-sector is

technology-driven and as such cannot be expected to create enormous job openings.

The GSM Service Providers have completely changed the tempo of the Nigerian business terrain by

creating countless opportunities for small and medium businesses in franchise, dealerships, and

retailer ships, street re- charge/refill card hawkers, to individuals selling second-hand handsets,

accessories and value added services within the GSM market. It has employment explosion both

directly and indirectly. Over 87 million Nigerians now have a convenient way of communication.

This development has greatly affected positively the business environment. MTN for instance,

appointed over 350 dealers nationwide. GSM has actually created the habit of time management in

Nigerians.

GSM contributed to the reduction of motor accidents on major Nigerian highways due to the

elimination of long journeys for pleasure and business. It is now convenient to place a call to business

associates rather than waste valuable time embarking on sometimes, needless journeys. It has also

improved internet and information technology awareness through WAP (Wireless Application

Protocol) Services, E-commerce through Mobile Payment Systems called M-Payments among others.

The contribution of foreign direct investment in the telecommunications sub-sector of Nigeria to her

economic growth and development can best be captured by the figures below:

Table1. Trend of Foreign Direct Investment in Telecommunication Sector and the Contribution of the

Telecommunications Sector to the Gross Domestic Product of Nigeria (1986 – 2014)

Year Contribution of the Telecommunications Sector to the

Gross Domestic Product of Nigeria (N’m)

Foreign Direct Investment in

Telecommunications Sector (N’m)

1986 129.40 80.40

1987 130.70 75.60

1988 131.90 160.60

1989 134.60 158.20

1990 137.30 240.50

1991 140.00 373.20

1992 144.90 391.50

1993 150.00 426.40

1994 151.50 429.60

1995 159.10 374.80

1996 167.00 485.60

1997 177.00 672.60

1998 185.90 689.20

1999 195.50 820.30

2000 207.50 820.30

2001 2398.68 955.30

2002 2983.07 1736.30

2003 3785.47 2890.50

2004 6015.91 4281.10

2005 7851.66 5565.40

2006 10567.90 8291.00

2007 14226.75 10758.20

2008 19159.16 7996.80

2009 25812.44 13238.10

2010 35674.18 72073.30

2011 291712.09 7564.4

2012 331502.79 6519.6

2013 6621734.16 85606.6

2014 5420654.36 8506.4

Source: Central Bank of Nigeria Statistical Bulletin; Central Bank of Nigeria Annual Report and Statement of

Accounts for various years

Table above shows the trend of Foreign Direct Investment in Telecommunications Sector and the

contribution of the Telecommunications Sector to the Gross Domestic Product of Nigeria between

1986 and 2014. A glance at the table would reveal that the Foreign Direct Investment in

Telecommunications Sector increased in most of the years reviewed with occasional decrease

recorded in few years. On the other hand the contribution of the Telecommunications Sector to the

Gross Domestic Product of Nigeria increased throughout the years. Just as it was revealed by the

regression result, the Foreign Direct Investment in Telecommunications Sector and the Contribution

of the Telecommunications Sector to the Gross Domestic Product of Nigeria have positive

relationship during the years considered.

A major striking observation in the trend is that the contribution of the Telecommunications Sector to

the Gross Domestic Product of Nigeria increased astronomically from N207.5 million in 2000 to

N2398.68 million in 2001. Besides, the telecommunications sector contributed significantly to the

Gross Domestic Product of Nigeria between 2001 and 2010 than what was recorded between 1986

and 2000. The reason for this is not far-fetched. It is as a result of the full deregulation of the

telecommunications sector in 2001 by the Obasanjo administration which attracted huge inflow of

foreign investment into the industry. It is evident from the foregoing that the country has profited

immensely from Foreign Direct Investment especially through the deregulation of the

telecommunications sector.

5. CONCLUSION AND RECOMMENDATIONS

According to a recent World Bank report, foreign direct investments in Sub-Saharan Africa yielded

the highest returns in the World in 2002. US companies that invested in Africa between 1990 and

2002, according to UNCTAD, had average annual returns of 25 percent compared with a world

average of 12 percent. Their Japanese counterparts made three times more profit on their African

investments than elsewhere. Net income from British direct investment in Sub Saharan Africa

(excluding Nigeria) increased by 60 percent between 1985 and 1995. The overwhelming evidence

shows that Africa is the fastest growing emerging market, particularly in Information and

Communication Technologies (ICTs), and especially in mobile communications. Recent large

investments are generating significant multiplier effects for African economies through the transfer of

technology (the generation of employment), improved productivity, and the fulfillment of demand for

services. Examples of successful ICT investments abound in every region on the continent.

Despite impressive returns on investment throughout the continent, getting finance for growth and

expansion from developed economies is often impossible, as many local entrepreneurs and businesses

can testify. “Most of Africa is effectively starting from scratch when it comes to (ICTs),” says Sicelo

Sikakne, Senior Account Manager at Techno Industries, “so very large sums are needed that go well

beyond the capacity of most local institutions.” MTN Nigeria‟s announcement in late 2003 of a

package of syndicated loans, equity, and debt totaling US$395 million from over 20 local and

international financial institutions is a case in point. This MTN investment is one of IFC's largest in

the telecommunications sector and its second largest investment to date in Sub-Saharan Africa. It is

also the biggest inflow of funds into ICT in Africa in recent times.

Countries that can offer a large domestic market and/or natural resources have inevitably attracted

foreign investors in Africa. South Africa, Nigeria, Ivory Cost, and Angola have been traditionally the

main recipients of foreign direct investment within the region.

Over the past few years, Nigeria has attempted to improve its business climate in an effort to attract

more foreign companies. Establishing a competitive business climate is a difficult task because it

takes time not only to implement policies but also to convince potential investors. In the case of

Nigeria, it is even more difficult because the country is not even on the radar screen of most

companies. It is a fact that countries that are perceived as most attractive investment environments

attract substantial foreign direct investment inflows, more than countries that have bigger local market

and/or natural resources.

To improve the climate for foreign direct investment, strong economic growth and aggressive trade

liberalization can be used to fuel the interest of foreign investors. Similarly, a closer look at the

experience of countries that have shown a spectacular improvement in their business climate reveals

that the implementation of a few visible actions is essential in the strategy of attracting foreign direct

investment. Beyond macroeconomic and political stability, Nigeria should focus on a few strategic

actions such as: 

Impact of Foreign Direct Investment on Sectoral Performance in the Nigerian Economy: A Study of

Telecommunications Sector

International Journal of Humanities Social Sciences and Education (IJHSSE) Page | 73

a. Opening the economy through a trade liberalization reform;

b. Modernizing mining investment codes;

c. Adopting international agreements related to FDI;

d. Developing a few priority projects that have a multiplier effects on other investment projects; and

e. Mounting an image building effort with the participation of high political figures, including the

President.

Based on the findings of this study, the following recommendations are thereby suggested in order for

Nigeria to attract more foreign direct investment in the Telecommunications sector and harness its

benefits better.

1. Since the regression analysis revealed that Foreign Direct Investment in the Telecommunication

sector impact positively and significantly on the performance of the sector, the government should

initiate policies that will promote the long-rum growth of the Telecommunication sector and the

economy at large. This will go a long way in attracting long-term fund that will be available for

productive purposes.

2. A stable political environment was found to be fundamental in attracting foreign investment to an

economy. Therefore, the government should focus on maintaining political stability before

formulating favourable policies that will attract long-term funds into the country.

3. The government must create a conducive business environment by improving its infrastructural

facilities assuring security of life and property and maintains policy consistency in order to boost

local investment in the country. It should also set machinery in motion to improve the quality of

the labour force through improved educational system, and qualitative and continuous manpower

training.

4. The capital market should be further deepened through the introduction of derivatives as stock

index future, interest and currency future as well as options on individual stock. Furthermore, the

regulators of the capital market must continue to strengthen the transparency of the market through

effective oversight, professionalism and improved operational facilities so as to boost the

confidence of both local and foreign investors in the market.

5. Since the exchange rate is also a significant determinants of Foreign Direct Investment, the

government must endeavour to stabilize the exchange rate so that investible funds will be cheap

and yield high returns in the country especially to foreign investors.

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AUTHOR’S BIOGRAPHY

Dr. Ezeanyeji Clement Ifebuolili, is a senior lecturer in the Department of

Economics, Faculty of Social Sciences, Chukwuemeka Odumegwu Ojukwu

University (COOU). He hails from Isi-Achina in Aguata Local Government Area of

Anambra State, Nigeria.

Dr. Ezeanyeji obtained his BA, Economics from Karnatak University Dharwad,

Karnataka State. MA, Economics from the prestigious Sir Venketeswara University,

Tirupathi in Andesh State, and his Doctorate (Ph.D) degree from Shivaji University,

Kolhapur Maharashtra State, all in India. He also obtained his Post Graduate Diploma in Business

Administration, from Annamalai University, Annamalai Nagar, Tamil Nadu State, and a Post

Graduate Diploma in Personnel Management and Industrial Relations from Indian Institute of

Management and Industrial Relations, Nehru Nagar, Agra, Uttar Pradesh State, all in India as well.

The author‟s teaching and research experiences are in the field of Monetary Economics, Public

Finance, Industrial Economics, Taxation and Fiscal Policy, and Labour Economics as well as

Economics of Production. He has drawn from his teaching experiences in his various publications.

Lord’nuel Ogo Ifebi, is a lecturer in the Department of Economics, Faculty of

Social Sciences, Chukwuemeka Odumegwu Ojukwu University (COOU). He hails

from Okofia Otolo Nnewi, Anambra State, Nigeria. He is married with children.

Lord‟nuel Ogo Ifebi obtained his B.Sc Economics from Unizik, Anambra State and

currently doing his Doctorate (Ph.D) degree in Ebony State University, Abakaliki.