The Impact of Foreign Direct Investment on Economic Growth in Nigeria (2010–2024)

Chapter One

1.1 Background of the Study
Foreign Direct Investment (FDI) has become a major catalyst for economic growth in developing countries. It involves the inflow of foreign capital, skills, and technology into domestic enterprises. In recent decades, many nations have recognized FDI as a key tool for stimulating industrial development and employment creation (World Bank, 2023).

In Nigeria, FDI has played a crucial role in sectors such as oil and gas, manufacturing, telecommunications, and banking. Through these investments, foreign firms contribute to infrastructure development and the transfer of modern technology. Moreover, they create jobs and expand local industries. Consequently, FDI is viewed as an engine of economic progress.

However, the flow of FDI into Nigeria has not been stable. Political instability, corruption, and policy inconsistency have discouraged long-term investment (Adewale, 2022). In addition, weak infrastructure and insecurity have further reduced investor confidence. As a result, the expected benefits of FDI are often undermined.

Furthermore, economists argue that FDI does not automatically lead to economic growth. Its effectiveness depends largely on sound macroeconomic policies, institutional strength, and human capital development (Olawale, 2021). Therefore, understanding how FDI influences Nigeria’s economic growth between 2010 and 2024 is both timely and important.

1.2 Statement of the Problem
Despite the recognized importance of FDI, Nigeria continues to experience slow and uneven economic growth. Many investment projects fail to generate sustainable development outcomes. Moreover, issues such as poor infrastructure, high inflation, and weak governance reduce the positive impact of FDI. This raises concern about whether FDI actually drives growth in Nigeria.

1.3 Objectives of the Study
The main objective of this study is to examine the impact of FDI on Nigeria’s economic growth between 2010 and 2024.
The specific objectives are to:

1. Analyze the trend of FDI inflows into Nigeria.

2. Investigate the relationship between FDI and GDP growth.

3. Identify factors that influence the performance of FDI in Nigeria.

1.4 Research Questions

1. What is the pattern of FDI inflows in Nigeria from 2010 to 2024?

2. How does FDI affect economic growth in Nigeria?

3. Which factors promote or hinder the effectiveness of FDI in the country?

1.5 Significance of the Study
This study is important because it will help policymakers understand the real influence of FDI on Nigeria’s economy. Furthermore, it will assist investors in identifying the sectors that respond positively to foreign capital inflow. In addition, it will contribute to existing literature on FDI and development in Sub-Saharan Africa.

1.6 Scope of the Study
The study focuses on Nigeria within the period of 2010 to 2024. It examines the relationship between FDI inflows and gross domestic product growth. Moreover, it considers both macroeconomic indicators and policy factors that shape investment performance.

1.7 Definition of Terms

• Foreign Direct Investment (FDI): The acquisition of assets or ownership in a domestic economy by foreign entities.

• Gross Domestic Product (GDP): The total monetary value of all goods and services produced within a country during a given period.