AN ANALYSIS OF THE REGULATORY LEGAL FRAME WORK FOR FOREIGN INVESTMENT IN NIGERIA: ISSUES AND CHALLENGES - UNIPROJECTS

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AN ANALYSIS OF THE REGULATORY LEGAL FRAME WORK FOR FOREIGN INVESTMENT IN NIGERIA: ISSUES AND CHALLENGES

AN ANALYSIS OF THE REGULATORY LEGAL FRAME WORK FOR FOREIGN INVESTMENT IN NIGERIA: ISSUES AND CHALLENGES

ABSTRACT
What provoked this research is the visibilly wanning national Sovereignty and Jurisdiction of developing Countries to make choice from options in economic, social and cultural policies due to globalization. The need to unravel the challenges the regulatory Legal Frame Work for Foreign investment in Nigeria faces, its impact on our national policies and policy making mechanisms and finding solutions. The methodology employed in this research is the doctrinal research. Primary and secondary materials sourced are analyzed. Foreign investment involves the transfer of a package of resources including capital, technology, management and marketing expertise. This can generally be divided into, Foreign Direct Investment (FDI) and Portfolio Investment (PI) although loans to government (i.e. foreign debts) have also been seen as a third category. The purpose of FDI is to acquire a lasting interest and effective control in the management of an enterprise without necessarily having majority shareholding. Portfolio Investments on the other hand, are directed at earning dividends, interests, capital gains and so on without participating in management.
The Multinational Corporations (MNCs) are major sources of foreign direct investment (FDI).
The regulatory Legal Frame Work is the power of host country through its law and regulatory bodies, authorities, and agencies to control investment activities by providing conditions that affect the behaviour of investors and development of investment to ensure fair and beneficial operations. These agencies including the Nigerian Investment Promotion Commission (NIPC), National Office for Technology Acquisition and Promotion (NOTAP) and Nigeria Oil and Gas Industry Content Development. The regulatory Legal Frame Work for foreign investment in Nigeria is confronted with many issues and challenges which make it impossible to achieve the objectives of government to regulate foreign investment, such as globalization of policy-making which has led to the erosion of national sovereignty, narrowed the ability of governments and people to make choices from options in economic, social and cultural policies; negative influence of the multinational corporations (MNCs) over government policies, lack of commitment on the part of government, non enforcement of penalties and inadequate penalty regimes, ineffective administrative systems and blind adoption of economic terms “dictated” by global markets and international institutions amongst others.
Considering that the regulatory legal frame work plays a crucial role in the economic life of the nation, government should pay adequate attention to it. Consequently, investment policies and regulations should be backed by law to enhance enforcement. The findings indentified in this work show that the penalties in Nigerian Investment Regulatory Frame Work such as Section 55 CAMA and Section 15 (1)(2) NOTAP are inadequate and do not have the force of deterrence. Procedure for exemption of Foreign Company from registration in Nigeria under Section 56 (1)(a)-(d) to the effect that such application should be made to the Council of Ministers through the Secretary to the Government of the Federation. The procedure is unnecessarily cumbersome and time wasting and will discourage donor international organizations and countries willing to undertake specialist projects under contract with any of the Governments in the Federation or their agencies. The National Office for technology Acquirsion and promotion (NOTAP) Act provides for the agency to vet agreements to be submitted to it by Nigerian Companies after negotiating and concluding with the Foreign technical partners and leaves much to be desired in the quest for maximum benefit from technology transfer and Foreign Investment in Nigeria.

TABLE OF CONTENTS PAGE
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Contents vii
Table of Cases xi
Table of Statutes xii
List of Abbreviations xv
CHAPTER ONE 1
GENERAL INTRODUCTION
1 Background of the Study 1
1.1 The Concept and Definition of Foreign
Investment and Regulatory Legal Frame Work 4
1.1.1 Regulatory Legal Frame Work 6
1.2 Statement of the Problem 7
1.3 Justification/Significance of the study 7
1.4 The Aim and Objectives of the Study 9
1.5 Limitations/Scope of Study 9
1.6 Literature Review 9
1.7 Methodology of Research 15
1.8 Organizational Layout 16
ix
CHAPTER TWO 17
HISTORICAL PERSPECTIVE OF REGULATORY LEGAL FRAME
WORK FOR FOREIGN INVESTMENT IN NIGERIA
2.1 Introduction 17
2.2 The Colonial Period 18
2.3 The Post Colonial Period 20
2.4 The Indigenization Period 23
2.5 The Structural Adjustment Programme (SAP) Period Till Date 27
CHAPTER THREE 29
CONTEMPORARY LAWS ON FOREIGN PARTICIPATION
IN BUSINESS IN NIGERIA
3.1 Introduction 29
3.2 Companies and Allied Matters Act, 2004 31
3.2.1 Alliens to Form Companies in Nigeria 32
3.2.2 Consequences of Carrying on Business without Registration 32
3.2.3 Incorporation of a Foreign Company in Nigeria 33
3.2.4 Foreign Companies Exempted from Registration in Nigeria 35
3.2.5 Procedure for Company Exemption from Registration 36
3.2.6 Status of Exempted Companies 37
3.2.7 The Regulation of Foreign Companies 37
3.3 The Nigerian Investment Promotion Commission Act 39
3.3.1 Registration and Obtaining of License 40
3.3.2 Guarantee of Investment 40
3.3.3 Settlement of Investment Disputes 41
3.4 Immigration Act 42
3.4.1 Basic Permits Required by an Alien to
Enter Nigeria (or enter) and work in Nigeria 43
3.4.2 Entry Permit/Visa 44
3.4.2.1 Ordinary Visa –Transit 44
3.4.2.2 Ordinary Visa – Single Journey Visit 45
x
3.4.2.3 The short Visit Visa 45
3.4.2.4 STR Visa (Subject to Regulation) 45
3.4.2.5 Registration of Aliens 47
3.4.2.6 Temporary Work permit (T.W.P) 47
3.4.2.7 Multiple Journey Visa 48
3.4.2.8 Gratis Courtesy 49
3.4.3 Expatriate Quota 49
3.5 Investment and Securities Act (ISA) 52
3.6 Foreign Exchange (Monitoring and
Miscellaneous Provisions) Act 53
3.7 Industrial Inspectorate Act 54
3.8 National Office for Technology Acquisition and Promotion Act 55
3.8.1 Registration of Contracts and Agreements 55
3.8.2 Effect of Registration of Contracts and Agreements 56
3.9 Incentives and Reliefs Available to Investors in
Nigerian Economy 56
3.9.1 Import and Export Incentives under Customs and
Excise Management Act 56
3.9.2 Fiscal Reliefs 58
3.9.3 The Time Factor in Incentives 60
3.10 Protectionism in Regulatory Policies 61
3.10.1 Arguments for Protectionism 62
3.11 Nigeria Oil and Gas Industry Content Development Act 67
3.11.1 First consideration for Nigerian Operators 67
3.11.2 Nigerian Local Content Monitoring Board 68
3.11.3 Content Plan 68
3.11.4 Technology Transfer Plan and Support for Technology Transfer in Nigeria 69
3.11.5 Professional Services 69
3.11.6 Offences and Penalties 69
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CHAPTER FOUR
ISSUES AND CHALLENGES OF GLOBALIZATION
4.1 Introduction 71
4.2 Present Challenges of Globalization on the 72
Nigerian Regulatory Legal Frame Work
4.2.1 The Liberalization of Trade, Finance and Investment 72
4.2.2 The Globalization of Policy-making 78
4.3 Rising inequality and the effects of globalization 83
4.4 Weaknesses of the Developing nations in facing the globalization challenge 87
4.4.1 The Repeal of Indigenisation Laws 90
4.4.2 The introduction of privatization, commercialization,
Deregulation (Liberalization) in the Nigerian economy 94
4.5 Future Challenges of Globalization on Nigerian Regulatory Legal Frame Work 96
4.5.1 Job loss in Nigeria 97
4.5.2 Impact of job loss on national Security 97
4.6 Costs and benefits of Foreign Investment to the Nigerian economy 98
4.7 Use of Multilateral Framework for Foreign Investment 103
4.7.1 General View 103
4.7.2 Lack of Realization of Anticipated Benefits for Developing Countries
from the Uruguay Round 105
4.8 Implementation challenges Faced by Developing Countries from
the Uruguay Round 108
4.9 Moves for New Issues in WTO 115
4.10 The Approach Needed 116
CHAPTER FIVE 119
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 119
5.2 Conclusion 122
5.3 Recommendations 124
Bibliography 126

CHAPTER ONE
GENERAL INTRODUCTION
1 BACKGROUND OF THE STUDY
In the course of an indept consideration of this research topic “An
Analysis of The Regulatory Legal Frame Work for Foreign Investment in Nigeria: Issues and Challenges,” the researcher‟s mind flashed on what Martin1 Khor referred to as “globalization” of national policies and policy making mechanisms. National policies that until recently were under the jurisdiction of states and people within a nation have increasingly come under the influence of international agencies and processes or of big private corporations and economic/financial players.
This has led to the erosion of national sovereignty and narrowed the ability of governments to make choices from options in economic, social and cultural policies. Martin Khor observed that most developing countries‟ independent policy making capacity had been eroded while they now have to adopt policies made by other entities, which might be detrimental to them. While on the other hand the developed countries, where the major economic players reside which also control the processes and policies of international economic agencies, are better able to maintain control over their own national policies as well as determine the policies and practices of international institutions and the global system.2
In his study “The New Global Economy and Developing Countries: Making Openness Work”, Rodrik observed that developing nations must participate in the world economy on their own
1. Khor M. Globalization and the South: Some Critical Issues Spectrum House, Ibadan [2005] PP.4 – 5
2. Ibid PP. 24 – 25
2.
2
terms, not the terms “dictated” by global markets and multilateral institutions. While noting the premise that reducing barriers to imports and opening to capital flows would increase growth and reduce poverty in developing countries, Rodrik‟s study concludes:
The trouble is, there is no convincing evidence that openness, in the sense of low barriers to trade and capital flows, systematically produces these results. The lesson of history is that ultimately all successful countries develop their own brands of national capitalism. The states which have done best in the Post – War period devised domestic investment plans to kick – start growth and established institutions of conflict management. An open trade regime, on its own, will not set an economy on a sustained growth path. 3
Governments the world over from time to time assess the quantum of foreign investment in their countries directly or indirectly depending on their policy
objectives and desire in availing the dividend of good governance to their citizenry. The role of foreign investment in the economic development of countries especially developing nations has prominently assumed an important dimension in recent times.
Consequent upon this, the regulatory legal frame work for foreign investment in Nigeria should reflect aspirations of the country for the common good of its citizens. The legal instruments must as a matter of necessity be the basis for entering into any venture as the consequences of flouting the law could at times be grave, hence the absence of regulations to human activities could be a direct invitation to anarchy and chaotic environment will in a matter of time result.
It is in view of this that laws have been enacted from time to time to regulate the business and investment environment so that parties could have clearer policy directions with a view to fostering growth and economic development of the society. It also gives some measure of control and direction, without which there cannot be a sustained economic growth. The level of participation by
3. Washington DC, Overseas Development Council (1999) P.15; Also see Khor M. Globalization and the South:
some Critical Issues, Spectrum House, Ibadan (2005) PP. 24 – 25.
3
foreigners in the economic development of a country is often times dictated by the state of that nation in focus in terms of its social – political development; economic policy amongst others.
These instruments do not work in isolation, and there must be some kind of balancing in order to achieve the expected growth. 4
Over the years especially from independence the successive governments in Nigeria had grappled with major problems that have hindered investment in this country which include inconsistent policies, and unfriendly investment laws amongst others.
In the world today the process of deepening and widening markets had produced new global and national institutions and new behavioural patterns amongst international investors. The global competition for limited global capital is fiercer and the challenge for attracting and retaining foreign capital very great. 5
Consequent upon these global challenges, in 1986, Nigeria began implementing the Structural Adjustment Programme [SAP] with liberalization and deregulation of the economy. This policy shifts and institutional changes were targeted at inflow of foreign capital.
This puts the regulatory environment for foreign investment in Nigeria in perspective.
4. Sofowora, M.O Foreign Private Investment – Legal Regimes. A Paper Presented at the Conference of the Central
Bank of Nigeria, held at Hamdala Hotel, Kaduna from September 1 – 5, (2003) PP. 137 – 138
5. Garba A.G. The Impact of Globalisation on Foreign Private Investment in Nigeria. A Paper Presented at the
Conference of the Central Bank of Nigeria, held at Hamdala Hotel, Kaduna from September 1 – 5 (2003) P. 175.
This research work is designed to examine the phenomenon of globalization of national policies and policy making mechanisms and its effect on foreign investment regulation in Nigeria.
The inspiration to choose this research topic is borne out of the visibilly wanning national sovereignty, and jurisdiction of developing countries to make choices from options in economic, social and cultural policies due to globalization.
4
The study is on the challenges the regulatory legal frame work for foreign investment in Nigeria faces, its impacts on our national policies and policy making mechanisms. It involves a review of legislations, the work of some known scholars, researchers, authors and so on in this area.
1.1 THE CONCEPT AND DEFINITION OF FOREIGN INVESTMENT;
AND REGULATORY LEGAL FRAME WORK
Foreign Investment according to Guobadia6 can be generally divided into two thus, Foreign Direct Investment [FDI] and Portfolio Investment [PI] [although loans to government [i.e. foreign debts] have also been seen as a third category], and also defined as involving the transfer of a package of resources including capital, technology, management and marketing expertise. Such resources usually have the effect of extending the production capabilities of the recipient country. 7
According to the same writer, “the purpose of direct foreign investment is to acquire a lasting interest and effective control in the management of an enterprise without necessarily having majority shareholding”.
Portfolio investment on the other hand are directed at earning dividends, interest, capital gains and so on without participating in management. Quoting Robert Pritchard, Guobadia stated that when Portfolio Investment carries control, it becomes foreign direct investment [FDI]. 8
In the same vein, according to Krishna Foreign Private Investment can be classified as Foreign Direct Investment [FDI] and Foreign Portfolio Investment [FPI].
FDI is an investment in real assets where real assets consist of physical things such as factories, land, capital, goods, infrastructure and inventories. The Multinational Corporations [MNCS] is chief source of FDI.
6. Guobadia D.A Issues In Facilitating Investment For National Development in Nigeria. In Jimoh AA. [e.d] Modern Practice Journal of Finance and Investment Law MPJFIL. Lagos October [1998] Vol.2. No. 2 P.39
7. Odozie V. An Overview of Foreign Investment in Nigeria 1960 – 1995. CBN, Research Department Occasional Paper No. 11
5
FPI has two major components: Portfolio investment and direct investment. Portfolio investment is the form of equity capital which empowers its owner to flow dividends. On the other hand, foreign direct investment enables the foreigner to own physical productive assets, which operates. Large multinational or transnational corporations essentially carry out this flow of resources with headquarters in developed nations.
Foreign Private Investment [FPI] is a major component of international capital flows. Oyeranti quoting Thirlwall observes that FPI refers to investment by multinational Companies with headquarters in developed countries. 9
From the perspective of Development Assistance Committee [DAC] of the Organization for Economic Co-operation and Development [OECD], FPI is conceptualized as net financing by an entity in a developed country; which has the objective of obtaining or retaining a lasting interest in an entity resident in a developing country.
In the above definitions of Foreign Investment, foreign direct investment [FDI] and foreign private investment [FPI] are used interchangeably.
This consequently explains why the International Monetary Fund‟s Balance of Payments Manual defines foreign direct investment as „investment made to acquire a lasting interest in a foreign enterprise with the purpose of having an effective voice in its management‟.
Another institution, the World Trade Organization [WTO] also observed that FDI occurs when an investor based in one country [the home country] acquires an asset in another country [the host Country] with the intent to manage that asset. 10
All the conceptualizations given above in respect of FDI and FPI are the same. These show that the management dimension is what differentiates FDI from Portfolio investment in foreign
8. Robert Pritchard: The Transformation in Foreign Investment Law – More than a Pendulum Swing. [1997] 7 /CCLR. 233/234 quoted by Guobadia, D.A. in Guobadia D.A. Issues in Facilitating Foreign Investment for National Development in Nigeria, Modern Practice Journal of Finance and Investment Law (1998) Vol. 2 No. 4 P. 39
9. Oyeranti OA. Foreign Private Investment: Conceptual and Theoretical Issues. A Paper Presented at the Conference of the Central Bank of Nigeria, held at Hamdala Hotel, Kaduna from September 1 – 5, (2003) p. 11
6
stocks, bonds and other financial instruments. FPI consequently, should be seen as the sum of the following components: 11
a. New equity from the foreign Company in the home country to the Company in the host country;
b. Reinvested profits earned from the Company; and
c. Long – and short – term net loan from the foreign to the host Company.
1.1.1 REGULATORY LEGAL FRAME WORK:
According to Oxford Advance Learner‟s Dictionary of Current
English, “Regulatory” is defined as „Having the power to control an area of
business or industry and make sure that it is operating fairly‟ and enforced by regulatory bodies /authorities / agencies‟. 12 In the same vein “Legal Frame Work” is defined as „a system established for the protection of‟. 13
To contextualize Regulatory Legal Frame Work in relation to Foreign Investment in Nigeria it can be defined as the power of the country through its regulatory bodies, authorities and agencies to control investment activities by providing conditions that affect the behaviour of investors and development of investment to ensure fair and beneficial operations.
The Nigerian Investment Promotion Commission (NIPC) Act amongst others is government‟s response to the regulatory legal frame work for foreign investment in Nigeria14. This enabling statute in section 17 specified four areas in which a non Nigerian cannot invest in Nigeria.15
1.2 STATEMENT OF THE PROBLEM
10. World Trade Organization (1996) Annual Report: Trade and Foreign Direct Investment, Vol. 1, WTO, Geneva, quoted by Oyeranti OA. In Foreign Private Investment: Conceptual and Theoretical Issues. A Paper Presented at the Conference of the Central Bank of Nigeria, held at Hamdala Hotel, Kaduna from September 1 – 5 (2003) PP. 11 – 12
11. Oyeranti AO. Loc cit P.12
7
The statement of the problem is to examine the negative effect of
globalization on national policies and policy making mechanisms in Nigeria.
1.3 JUSTIFICATION / SIGNIFICANCE OF THE STUDY
Current trends have established that the regulatory legal frame work forforeign investment in Nigeria and other developing nations are faced with daunting challenges thrown up by globalization of national policies and policy making mechanisms. National policies that were until recently under the jurisdiction
of states and people within a nation now under the influence of international agencies and big private corporations and economic / financial players.
Furthermore, the challenge is that most developing countries‟ independent policy making capacity had been eroded hence they now adopt policies made by other entities, which can be detrimental to them.
This research work is useful to the Nigerian Investment Promotion Commission, [NIPC] and all other Investment regulatory agencies in Nigeria which should come to the knowledge of the fact that developing nations must participate in
the world economy on their own terms, not those dictated by global markets and multinational institutions.
Also through its findings cause Nigeria to learn the lesson of history that ultimately all successful countries developed their own brands of national capitalism and foreign investment regulations.
12. Oxford Advance Learner’s Dictionary of Current English, New 7th Edition. P. 1227
13. Ibid P. 591
14. Cap NI 17 LFN 2004
15. Section 17 Cap. NI 17 LFN 2004; see also Guobadia DA. Issues in Facilitating Foreign Investment for National Development in Nigeria, Modern Practice Journal of Finance and Investment Law (1998) Vol. 2 No. 4 p. 42
8
The work is also very useful to the government and regulatory agencies for foreign investment by alerting that an open trade regime, on its own, will not set any economy on a sustained growth path instead it may harm domestic producers and cause instability. The work will apparently assist government to come up with policies and reforms that tilt towards protectionism.
Finally, the research findings will serve as literature to teachers and students of law, corporate practitioners and all other stakeholders who have interest in the dynamics of the regulatory legal frame work for foreign investment which focus should be national interest.
1.4 THE AIM AND OBJECTIVES OF THE STUDY
The Objectives of this study are to examine the phenomenon of globalization of national policies and policy making mechanisms, its effects on foreign investment regulation in Nigeria presently and in the future.
1.5 LIMITATIONS /SCOPE OF STUDY
The scope is limited to the stated objectives consequently the examination of the phenomenon of globalization of national policies and policy making mechanisms, its effects on foreign investment regulation in Nigeria presently and in the future. The work refers to some specific regulations and laws such as Nigerian Enterprises Promotion Acts of 1972 and 1977, Nigerian Enterprises Promotion (Issues of non-Voting Equity Shares) Act 1987(now repealed) used for the purpose of this work. Also the research work covers some contemporary laws on foreign participation in business in Nigeria such as the Companies and Allied Mattes Acts,2004 Nigerian Investment Promotion Commission Act (NIPC),2004 Immigration Act,2004 Investments and Securities Act,2007 National Office For Technology Acquisition and Promotion Act,2004 Nigerian Oil and Gas Industry Content Development Act,2010 amongst others, World Trade Organization (WTO) policies and works of authors that are relevant to this research topic.
9
1.6 LITERATURE REVIEW
The regulatory environment is pivotal to foreign investment in Nigeria. This is because the impact of globalization and the challenges it exacts on the legal regimes of developing nations like Nigeria are enormous. Despite the importance of this subject not many writers have ventured to contribute to the subject. This makes this research pertinent and creates opportunity to contribute to knowledge in this area.
Materials related to this topic are scattered in different books and write ups. For instance Odife in his book entitled “Structural Adjustment and Economic Revolution in Nigeria,”16 made some contributions on some issues related to this research topic.
He dealt with the second phase of Indigenization and Foreign Direct Investment [FDI] in Nigeria, encouraging Foreign Private Investments in the eighties, advantages of FDI and prospects for Nigeria‟s performance in FDI.
Under these he asserted the following:
He concluded that government policy measures should be evaluated for effect on other national objectives before implementation.
He also pointed out that a proper industrial policy would require that Nigeria evaluates every project from the point of view of Nigeria and not of the foreign investors hence not every FDI would be accepted from this point of view.
The writer observed that some FDI could consist of the export of technology fast – turning obsolete in its country of origin while some others may consist of the export of industries which require large scale governmental subsidies.
He concluded that some of the investors may prevent Nigeria from moving ahead to industrialize in required areas by their presence and effective lobbying power. 17
10
His work is partly relevant to this study even though it failed to touch on the challenges of globalization on our regulatory environment. Badmus in his book
16. Odife D. Structural Adjustment and Economic Revolution in Nigeria. Heinemann Educational Books
Nigeria, Ibadan, [1989] pp. 84 – 85.
17. Ibid
entitled, “Corporate Law Practice” discussed some issues that are relevant to this research topic. He devoted two chapters of his book under the following headings; Foreign participation in business in Nigeria and incentives and reliefs available to investors in Nigerian Economy.18
He highlighted major laws affecting foreign participation in business in Nigeria.19.
Also, he enumerated incentives and reliefs available to foreigners who invest in Nigeria.20 However his work failed to cover a very vital aspect of this study, globalization and other challenges on the regulatory legal frame work.
Furthermore, Oyeranti in his paper on “Foreign Private Investment: Conceptual and Theoretical Issues,”21 discussed how developing economies can maximize their benefit of FDI to their advantage.
He believes that developing economies could maximize the advantages of foreign direct investment by parallel and equivalent stimulation of domestic private investment,
stable low inflation macroeconomic environment which is more fundamental than special incentive to attract FDI.
He concluded that developing countries should become more competitive to strengthen their bargaining position in the emerging globalized world economy.
Though relevant to the study, the work failed to highlight how developing countries could strengthen their position in the emerging globalized world economy. Aremu in
11
18. Bhadmus Y.H. Corporate Law Practice in Nigeria, Chenglo Publishers, Off Maryland, Enugu [2009] pp. 85 – 107
19. Ibid
20. Ibid
21. Oyeranti O.A. Foreign Private Investment: Conceptual and Theoretical Issues. A paper presented at the Conference of Central Bank of Nigeria, held at Hamdala Hotel, kaduna from September 1 – 5, (2003) p. 33
his paper on “An overview of Foreign Private investment in Nigeria”.22 stated that though FDI through Transnational Corporations [TNCS] are capable of bringing into Nigerian economy sizeable resources, this same TNCS are chief villians in many international commercial conflicts and tensions.
He further asserted that what foreign investors are bringing into Nigeria are paramount, but the potential access of such capital resources, technology, skills and
their global strategies should be equally evaluated.
The writer urged that in drafting agreements with the TNCS, the regulatory agency in Nigeria must make sure that such agreements are properly drafted and adequately secure the interest of the parties, while at the same time develop a good negotiating strategy for the economy to use in negotiating foreign direct investment.
This work is relevant to the study. Other relevant works consulted include Sofowora,
“Foreign Private Investment – Legal Regime”.23 who stated that legal regulations are
a necessary prerequisite to instill confidence in foreign private investors. This work failed to highlight how legal regulations can instill confidence in foreign private investors consequent upon the challenges thrown up by globalization.
Garba, the Impact of Globalization on Foreign Private Investment in Nigeria24
He stated that in strategies for dealing with globalization, the focus must not be just
creating enabling condition for FDI in Nigeria but on enhancing Nigeria‟s overall
competitiveness in global international relations. This work is relevant to the study.
22. Aremu J.A An Overview of Foreign Private Investment. A paper presented at the conference of Central Bank of Nigeria, held
at Hamdala Hotel, Kaduna from 1 -5 September, (2003) pp. 124 – 125
23. Sofawora M.O. Foreign Private Investment – Legal Regime, A paper presented at the Conference of Central Bank of Nigeria,
held at Hamdala Hotel, Kaduna from 1 – 5 September, (2003) P. 137
24. Garba A.G. The Impact of Globalization on Foreign Investment in Nigeria. A Paper Presented at the Conference of Central Bank of Nigeria,
held at Hamdala Hotel, Kaduna from 1-5 September, (2003) pp. 167 – 168.
12
Bello, in his Seminar Paper on the Role and Achievements of Nigerian investment promotion commission, highlighted benefits of FDI 25 which included transfer of technology to individual firms and technological spill – over to the wider economy; increase in exports, increase in savings and investment; faster growth of output and employment amongst others.
He also enumerated challenges hindering investment into the country; as including inconsistent government policies, unfriendly business laws, uncompetitive incentives, frequent labour crises, poor state of infrastructure and high cost of doing
business in Nigeria. The work is relevant to the study but the challenges it enumerated fail short of the focus of the study. Osinubi., Amaghionye in their paper titled “Foreign Private Investment and Economic Growth in Nigeria26 “pointed out that the exact nature of the impact of FDI varies between industries and countries, depending on country characteristics and policy environment. But they did not elaborate on the policy environment. Though the work did not elaborate on the policy environment, it is relevant to the study.
Khor, 27 in his research concludes: “A global investment regime that took away a
developing country‟s ability to select among FDI projects would hinder development and prejudice economic stability”. He explained that it is common knowledge that
25. Bello M. The Role and Achievements of Nigerian Investment Promotion Commission.
A paper presented at the conference of the Nigeria Institute of Industrial Management
Held at Lagos Sharaton Hotel from April 6 – 7 (2005) p. 18
26. Osinubi T.S., Amaghionye Odiwe L.A. Foreign Private Investment and Economic Growth in Nigeria.
Review of Economic Business Studies, June (2010) Vol. 3 Issue 1. p. 107
27. Khor M; Loc Cit pp. 79 – 80
23. Bank of Nigeria, held at Hamdala Hotel, Kaduna from 1 – 5 September (2003) p. 163.
24.
13
for foreign investment to play a positive role, government must have the right and powers to regulate its entry, terms of conditions and operations.
Also the learned researcher failed to state how the global investment regime anomaly could be corrected, yet it is relevant to the study.
Another major text reviewed in the course of this work is Aswathappa on International Business. 28
The text treated the case for protectionism under two broad categories: Political and Economic.
Under political protectionism the text laid emphasis on National Security, Retaliation, Jobs protection and Human Rights protection. While economic protectionism covered Infant Industry and Strategic Trade Policy.
This work is very relevant to the study considering its emphasis on protectionism and the challenges of globalization on the regulatory environment.
Yakubu- “The Regulatory Environment and Foreign Private Investment in Nigeria: Issues and Challenges”.29
He discussed investment environment in Nigeria from economic and infrastructural development points of views. He further looked at issues and challenges of the
Regulatory Environment, talking about Nigeria‟s friendly investment laws, Anti – Corruption Commission and concluded by stating that Nigeria needs to be proactive in formulation and implementation of policies to bring about a conducive investment legal
frame work. The approach of the work is slightly different from that adopted in this study.
28. Aswathappa K. International Business, 2nd Edition Tata Mac Graw Hill New Delhi (2006) pp. 169 – 171
29. Yakubu Sura J.B. The Regulatory Environment and Foreign Private Investment in Nigeria: Issues and Challenges. A Paper Presented at the Conference of the Central Bank of Nigeria, held at Hamdala Hotel, Kaduna from September 1 – 5 (2003) pp. 310 – 313
14
In all, the literature considered are expository on certain aspects of the study but did not discuss the impact of globalization and its challenges on the regulatory legal frame work and its effects on foreign investment in Nigeria.
Generally, the above examination could lead to a conclusion that the regulatory legal frame work and foreign investment in Nigeria: issues and challenges have not been given due attention. Legal Practitioners, authors and academics that have written on foreign investments, regulatory legal frame work and challenges of globalization failed to completely or extensively discuss the subject.
Even if these experts highlighted on investment laws and or globalization they only discussed it peripherally. Also the books and papers failed to point out the adverse effects of globalization on regulatory legal frame work presently and in future and foreign investment in Nigeria. Furthermore, the work of Odife was written in 1989 i.e. 23years ago hence it is devoid of discussing many contemporary issues related to regulatory legal frame work in relation to globalization and foreign investment. Consequently, there is a serious need to make a research specifically on this subject area particularly when developed nations are influencing globalization mechanisms with some hidden negative agenda on the regulatory legal frame work for foreign investment in developing countries like Nigeria.
1.7 METHODOLOGY OF RESEARCH
The research method used is doctrinal research. Primary and Secondary
materials sourced and analyzed in this work are classified thus :
1. The Primary Sources of material used include; Statues/Legislations and Case
laws.
2. Secondary Sources of materials used consist of the following: Books,
Journals, Internet articles, Articles, Seminars and Workshop papers, News
15
papers, International materials (treaties and protocols).
1.8 ORGANIZATIONAL LAYOUT
This work is made up of five chapters which are written in the following order: Chapter one focuses on the general introduction and preliminary issues such as the concept / definition, statement of the problem, objectives of the study, Limitations/ Scope of the study, Literature review, Justification / Significance of the research, Research Methodology and Organizational Layout.
Chapter two discusses the historical perspective of regulatory environment for foreign investment in Nigeria, from Colonial period to the present day.
Chapter three analyses the contemporary laws on foreign participation in Business in Nigeria and protectionism in regulatory policies. Chapter four examines whether or not Nigerian Foreign Investment Regulations have been negatively influenced by globalization of national policies and policy making mechanism. Chapter five concludes the research by summarizing the work, highlighting the conclusion, (observations/ finding) and recommendations.
CHAPTER TWO
HISTORICAL

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