ABSTRACT
Attempts
at attracting foreign direct investment in Nigeria have been based on the need
to maximise the potential benefits derived from them, and to minimise the
negative effects their operations could impose on the country. To this effect,
the federal government of Nigeria has over the years, been employing different
incentive measures, both fiscal and monetary, for the purposes of attracting
investors to develop the economy. How successful have these incentives been?
In
this study, “Impact Of Incentive Measures On The Flow Of Foreign Private
Investments: The Study Of Nigeria’s Tax Incentive Policy Measures (2000– 2009)”
the researcher set out achieve four objectives to assess the Nigerian tax
environment; to examine the incentive regimes of the federal government of
Nigeria; to study the trend of foreign private investment in the country, with
the objective of ascertaining its economic impact; and finally, to appraise the
effect of the various incentives on foreign private investment in Nigeria.
The
research found that there are several built-in incentives to attract foreign
private investments into Nigeria; that the manufacturing and agricultural
sectors were more favoured in the incentive measures; that the incentive
measures were able to boost the inflow of foreign direct investments; that this
increased inflow however, could not translate to visible
improved living standards, nor reduce inflation and the unemployment status of
the nation.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
According
to Medupim (2002:1), foreign private investment accounted for 70% of the total
industrial investment, in Nigeria, at independence. This also constituted over
90% of investment in such basic industries as chemical production, and vehicle
assembly plants and no less than 90% of other manufacturing sub-sectors.
Foreign Private Direct Investment (FPDI) dominated banking, insurance and
mining before the indigenization programme (Ukeje, 2003:285).
However,
the indigenization programme of 1972 and 1977 drastically reduced foreign
private investment in Nigeria. Ever since then, there have been concerted
efforts by the Federal Government of Nigeria to industrialise and attract
Foreign Direct Investment, over the years. This is because, according to Okafor
(1983:53), direct foreign investment often means much more than capital inflow.
It also constitutes a source of new product ideas, technology, professional
expertise, etc. These efforts take the form of incentive schemes, which come in
different forms. But common in African and the company income tadx relief,
import duty relief, and all other tax incentives (ibid).
Howbeit,
in order to attract enough foreign private investment, the macro economic
environment must be attractive to foreign investors also. Issues like
industrial infrastructure, sizeable internal market, and political stability
together with a friendly tax environment, all culminate to influence foreign
private investment into any country.
The
Nigerian scenario is such that, since after the indigenisation programmes,
successive governments have been trying very hard to woo foreign investments
into the country. This was crystallised by the Federal Government repealing the
Nigerian Enterprises Promotion Decree (NEPD) of 1977, in the year 1995, and in
its place promulgated the Nigerian Investment Promotion Decree (NIPD) No 16 of
1995, and the Foreign Exchange Decree No 17 of the same 1995.
All
with the intention of liberating the economy, as to open it up to foreign
direct investments.
Added
to the above were the carving out of Industrial Zones, and Export Promotion
Zones. Various tax incentives have also been put in place, coupled with the
relaxation of fund repatriation. The deregulation of the economy, and the
privatisation of the non-performing public corporations, has also been embarked
upon.
To
what extent then, has all these moves been fruitful? The aim of this research
is to investigate how incentive measures are used by government for attracting
Foreign Private Investment in Nigeria and the extent of its success. To
accomplish this, this project paper is presented in five chapters – chapter one
introduces it, chapter two deals on the review of related literature, while the
methodology of the research is presented in chapter three. Chapter four handles
the data presentation, analysis and the testing of hypotheses. Chapter five
summarises the findings of the research, draws conclusions and makes
recommendation.
1.2 STATEMENT OF PROBLEM
Attempt
at attracting foreign direct investment into Nigeria have been based on the
need to maximise the potential benefits derived from them, and to minimise the
negative effect their operations could impose on the country (Aremu, 2003:44).
The ways of attracting this FDI, especially by the developing countries, like
Nigeria, is tax incentives (Anyafo, 1996:53). This taxation is defined as a
compulsory levy payable by an economic unit to the government, without any
corresponding entitlements to receive a definite and direct quid pro quo from
the government (Bhatia, 2001:37).
To
this end of attracting FDI, the Federal Government of Nigeria has negotiated
and signed tax treaties with a few Foreign Governments, pursuant to section 38
and schedule 7 of Personal Income Tax Act (PITA) and section 34 of Company
Income Tax Act (CITA). These statutes feature a wide array of tax holdings and
exemptions which are intended to boost investment. For instance, the Industrial
Development (Income Tax Relief) Act makes provision for the granting of relief
to pioneer companies (Abdulrazaq, 2002:5). Other tax incentives to encourage
Foregin Direct Investment are also in place.
With all the tax incentives lavishly given by the government, what has
been the response to foreign direct investment? How has the implementation of
these incentives affected the net flow of foreign capital? How has the net
effect of attracting foreign direct investment been favourable to the economy?
Are there some other measures required by the government, so as to have the
desired net effect?
In
recognition of the above, the researcher intends to study the present tax
incentive regime in Nigeria, with the aim of ascertaining how far they have
encouraged foreign direct investment in the country......
================================================================
Item Type: Postgraduate Material | Attribute: 71 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
================================================================
No comments:
Post a Comment