Foreign Direct Investment and the Growth of the Nigerian Telecommunications Sector: Issues and Analysis

Abstract

This study examined the effect of Foreign Direct Investment (FDI) on the growth of the telecommunications sector in Nigeria from 1997 – 2011. Nigeria has joined the rest of the world to seek FDI as evidenced by the formation of New Partnership for Africa’s Development (NEPAD). Until recently FDI was not fully embraced by Nigeria leaders as an essential feature of growth in the telecommunications sector reflecting largely fears that it could lead to loss of political sovereignty, push domestic firms into bankruptcy due to increased competition. The methodology adopted for this study is the Ordinary Least Square (OLS) method to determine the relationship between FDI and the growth of telecommunications sector. The findings show that FDI has positive effect on the productivity of the telecommunications sector and it is statistically significant. It is therefore, recommended that since communications FDI has the highest potential for contributing growth, it needs to be properly channelled and integrated into the mainstream of the economy as well as conscious provision of necessary infrastructure which will lower the cost of doing business in Nigeria.
Key words: FDI; Telecommunications sector; Growth