Foreign Investment And Employment Creation In Nigeria 2004-2010

ABSTRACT

The issue of the using external financing, in particular foreign investment in achieving

developmental objectives and aspirations has been at the forefront of economic

diplomacy of various Nigerian governments since 1985. In particular, National

Economic Empowerment and Development Strategy (NEEDS), programme has

encapsulated this view for it to achieve its objectives of poverty reduction, wealth

creation and employment generation. It is believed that the achievement of these

objectives will help in the transformation of the Nigeria’s socio-economic development.

This Study is an effort to examine the inflow of foreign investment as a source of

external finance for the achievement of employment creation objectives of NEEDS.

Blending the primacy of material conditions of Marxist political economy approach and

the theory of Post-Colonial State as the theoretical framework, and using the secondary

sources of data, the study found the following. There have been increase in the inflow

of foreign investment, and this inflow has not significantly affected employment

creation as unemployment increased within the period. The major determinant of

foreign investment inflow within the period is the increase in the level of external

reserve and the liberalisation of transaction in the Nigeria financial account occasioned

by the IMF/World Bank induced policy of debt relief. This has induced the amount of

foreign portfolio investment inflow which has increased more that the inflow of

Foreign Direct Investment. The largest inflow went into stock market and banking

sectors. We also found that the policy of low inflation pursued by the Central Bank of

Nigeria, as a means of stabilizing, the economy for attraction of foreign investment

contradicts the objectives of employment creation of NEEDS as it takes away money in

circulation and reduced the amount available for domestic investors. The study also

found that the policy is a source of short term accumulation for the financial capital and

has increased the integration of the Nigeria economy to the international capitalist

market.