FOREIGN INVESTMENT OPPORTUNITIES, POTENTIALS AND BARRIERS IN NIGERIAN CAPITAL MARKET
ABSTRACT
    In view of the critical role of the Nigerian Capital Market in the development and growth of the economy, foreign Investment operations had been scrutinized to determine its impact on the Nigerian capital market.
    Foreign investment which is the summation of foreign direct investment and foreign portfolio investment are inflows into the Nigerian capital market that was meant to make an impact in the Nigerian economy.
    Based on this background, the focus of this research work is to find out how some economic variables like GDP growth, market capitalisation, inflation rate, cost of capital represented by interest rate and how government systems would influence the flow of foreign investment in the Nigerian capital market.
    So many opportunities abound to foreign investors in the Nigerian economy which would assist in the growth and development of our nation. Therefore the system of government that is being practiced by Nigeria would help to enhance and promote foreign investors preference to invest in our country. This research work also analyses the barriers and potentials of foreign investment in the Nigerian capital market, as investors would not venture in an economy that is not potent (profitable).
    From the result arrived at in chapter four, it was gathered that the aggregate independent variable might not influence foreign investment in the Nigerian capital market. Thus more concern was emphasized on the individual independent variable in relation to the development variable (FI). Thus, the GDP growth rate impact on foreign investment if a favourable GDP growth as shown in the result in chapter four would attract foreign investors in the economy. The growth of the Nigerian capital market represented by market capitalisation does not necessarily attract foreign investment as research had show that investors also prefer a capital market that is not mature, to invest in.
    Also, the result also showed that inflation would have impact on foreign investment flows in the Nigerian capital market. Therefore, control measures had to be taken to ensure a stable inflation rate so that investors would gladly come into the country to invest.
    The interest rate changes is irrelevant in determining its impact on foreign investment, as research had shown that no matter the decrease or increase in the cost of capital, investors will always invest in an economy that is potent like Nigeria. Finally, the restful also showed that democratic regime had a very positive impact on foreign investment contrary to military regime under the scope of this study.
 TABLE OF CONTENTS
Chapter One: Introduction
1.1    Background of the study    -
1.2     Statements of problem    -    -
1.3    Research question    -    -
1.4    Objective of the study    -    -
1.5    Scope of the study    -    
1.6    Significance of the study-    
1.7    Research hypothesis-    
1.8    Limitation of the study    
Chapter Two: Literature Review
2.1    Introduction    -    -    
2.2    Concept of capital    -    
2.3     An overview of the Nigerian financing system    
2.4    The roles of the Financing system in the economy    
The structure and development of the
Nigerian financial system    
2.6     Appraisal of performance and challenges
for the financial system    -
2.7     The stock exchange and capital formation
in Nigeria
Essential features of the foreign exchange market   
2.9    Financing and external debt of developing countries    
Chapter Three: Research Methodology
3.1    Introduction    -    -    -    -    -
3.2    The population    -    
3.3    The research design    -    -    -    
3.4    Techniques of data analysis    
Chapter Four: Data Presentation, Analysis and Interpretation
4.0    Introduction    -    -    
4.1    Data presentation    -    -    -    
4.2    Interpretation of result        -    
4.3    Policy implication      -    
Chapter Five: Summary of findings, recommendation and conclusion
5.1    Summary of findings    -    
5.2    Recommendation    -    
5.3    Conclusion    -    -    -    
5.4       Bibliography        -    -    
Appendix     
CHAPTER ONE
INTRODUCTION
1.1        BACKGROUND OF THE STUDY
    When the indigenisation measure was embarked upon in the early 1972, considerable importance was placed on the facilitating role which the Stock Exchange would play. In the event, the indigenisation exercise turned out to be something different. It continued to be debated whether the net impact of this measure on the nation’s Exchange was positive or negative. It is true that the exercise resulted in a drastic increase in the number and volume of securities listed but it seemed also to have become unfavourable in terms of the unwholesome pricing policies and other traditions which it imposed on the stock market. Put succinctly the aim of the exercise was to transfer certain designated shares from aliens to Nigerians. Michael, (2003), Due to the limitations of the indigenisation measures, the need for foreign investment to enhance the activities of the Nigerian capital market was advocated. Four main factors have helped to encourage a the growth in direct foreign investment of funds through the Nigeria capital market during the last few decades. These are:
The phenomenal growth in institutional funds (funds held by contractual savings institutions such as insurance companies, pension and provident funds, and unit trusts).
Consequent search for avenues for obtaining high returns across national borders.
The search for avenues for risk diversification.
Technological advancement in information and communication systems.
With the establishment of the foreign exchange market (FEM) in September 1986, great responsibility was placed upon the banks for exchange rate stability and the orderly management of the country’s external resource failing which the economy continued to be adversely affected. A well developed Foreign Exchange Market and the Nigerian stock Exchange Market is a starting point at encouraging foreign investment in Nigeria. Onyiuke (2003). With this market, both foreign and local investors would not hesitate to utilise the opportunities of investing in Nigeria.
    Government cannot be left out in the encouragement of foreign investment in Nigeria being providing an enabling vibrant economic environment that would attract investors through its numerous policies. Also, the socio-political atmosphere of the country should be conducive so as to attract both foreign and local investments.
1.2 STATEMENTS OF PROBLEM
    No doubt, the Nigerian capital market which should be the main source of long-term financing as well as the development of investments has remained rather sluggish in terms of growth, efficiency, activity and funds mobilisation. Its operational character remains cumbersome and awareness of its functions limited .As a result ,users of the market remain few, securities are still in short supply and participation in the market restricted to a few major companies and the Federal Government of Nigeria. Although many of these problems are being tackled by the Securities and Exchange Commission and the Nigerian Stock Exchange, there are still quite a few policies and programs that need to be pursued to bring the market to the standards of other fast growing and developing emerging markets worldwide. According to Osaze, E.B 2000: Some of the actions that need to be taken in this direction include:
Better and more aggressive enlightened programmes;
Creation of new and flexible long-term financial products to increase the supply of securities.
Standardising disclosure requirements for international investment and capital inflow.
Improving accounting and auditing standards to satisfy the information requirements of financial markets, investors and international financial community.
    The study therefore seeks to provide the basis in which the problems highlighted above could be contained if not eliminated to ensure a vibrant market for both local and foreign investors alike.
1.3        RESEARCH QUESTIONS
 The questions that needed ready answers regarding foreign investment opportunities, potentials and barriers in Nigerian capital market could be highlighted as follows:
What foreign investment opportunities are available in Nigeria?
How vibrant is the Nigerian capital market to aid and ensure economic development?
How do we harness the given opportunities in Nigeria?
What are the likely difficulties hampering foreign investment in our economy?
How big is the Nigerian capital vis-à-vis foreign investment in our economy?
1.4    OBJECTIVE OF THE STUDY
    The aim of this study is to identify the impact of foreign investment and how it would contribute to the overall development of the country as well as be of great benefit to our local stock market. Jhingan, (1997).  The following are the sub-objectives that are derived from the main objectives to;
Analyse the foreign investment opportunity available in Nigeria.
Establish the potentials of the Nigerian capital market to know its vibrancy in ensuring economic development.
Analyse the various government legislations as they impact on the activities of the Nigerian capital market vis-à-vis foreign investment
1.5    SCOPE OF THE STUDY
    Geographically, the scope of the study would be restricted to Nigeria only for the purpose of achieving the outlined objectives. The study would also focus on the impact of foreign investment in Nigeria by comparing the transition from military regime to democratic regime. This is to show how these various administrations has contributed towards the promotion of direct foreign investment in Nigerian capital market. The purpose of adopting this basis of comparison
is to identify the impact of foreign investment in Nigeria during these two regimes.
1.6    SIGNIFICANCE OF THE STUDY
The following are the significance or relevance of the study to;
Serve as a guide for investors (both foreign and local) in making their investment decisions.
Serve as a reference point in determining if Nigeria would ever develop (progress) without foreign investment.
Assist prospective researchers that would want to make research on direct foreign investment.
1.7    RESEARCH HYPOTHESIS
    In the light of the problems of this study and the objectives, the following hypotheses will be tested.
Ho:     The inflow of foreign capital does not raise
stock prices and lower cost of capital
1.8    LIMITATION OF THE STUDY
This study was faced with inadequate time for proper research to be carried out, as well as the reluctance of key government institutions to make available information, which would be of great importance to this study.