Preconditions for Foreign Direct Investments Stimulation: The Nigerian Experience, 1985 – 1993

Abstract

Following the 1980 Berg Report, and the injection of “political conditionalities” by the

Bretton Woods Institutions (BWI), in particular the International Monetary Fund (IMF) and the

World Bank (WB) in their financial relationships with the developing countries, the intellectual

issue of how best to attract and stimulate foreign direct investments (FDI) became subsumed

within the great debate ignited by the famous Report. As the debate raged on, there was the lack of

specific focus on the determination of both the theoretical and empirical relationships, or the

validation of the assumed theoretical and empirical relationships between the “new additionalities”

and/or “political conditionalities” as postulated and propounded by the BWI and their intellectual

hangers-on on the one hand, and the stimulation of FDI on the other. The lack of focus on the

theoretical and empirical relationships obviously reveals the fact that perhaps certain preconditions

are important for FDI to be stimulated and as well attracted on a permanent basis.

Against the above background, the study concerned itself with what the preconditions are,

and whether they were necessarily competitive politics, free press, tax incentives, good

infrastructure, favourable investment laws, among others, as the Babangida administration

implemented the combined, inseparable programmes of political transition and economic

adjustment between 1985 and 1993 in Nigeria. While the data sources adopted by the study were

rooted in the established traditions of broad qualitative research methodology through an intensive

survey of the avalanche of materials on FDI in Nigeria in Central Bank of Nigeria (CBN) Reports,

the technique of data analysis was patterned along the historical and analytical method of

developmentalism, a perspective to scholarship that emphasizes history not as narrative events but

as explanatory factor and/or force shaping and determining development and its processes.