ROLE OF INSURANCE IN ATTRACTING FOREIGN DIRECT INVESTMENT IN NIGERIA (1985-2018)
CHAPTER ONE
INTRODUCTION
1.1    Background of the Study
Nigeria is an investment haven for many foreign companies as well as individuals. The vast natural resources which the country possesses and its renowned status as the “Giant of Africa” natural resources, no doubt, creates an attraction of Foreign Direct Investment to foreigners all over the world. However, interestingly, statistics from institutions such as the World Bank and the International Monetary Fund reveal that the ratio of Foreign Direct Investment in Nigeria is abysmally low in comparison to its potential. As a result, promoting foreign participation in Nigeria has been a focal point for the Nigerian Government in recent times, through the implementation of various policies and issuance of directives. (Onu, 2012).
Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. World Bank (1996) conceptualized Foreign Direct Investment (FDI) as investment that is made to acquire a lasting management interest (usually 10% of voting stock) in an enterprise and operating in a country other than that of the investors.
According to residency(2014)the investors purpose being an effective voice in the management of earning either long term capitalor short term capital as shown in the nations balance of payments account statement (Macaulay, 2012). Broadly, foreign direct investment includes mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans. In a narrow sense, foreign direct investment refers just to building new facilities. Todaro, (2007) believed that FDI encourages the inflow of technology and skills and fills the gap between domestically available supplies of savings, foreign exchange and government revenue. It also encourages the inflow of technology and skills. Onu, (2012) asserted that the contributions of foreign investment to Japan after the World War II and in South Korea after the Korean War has tremendously assisted the insurance  of these countries by providing the local economy with a source of foreign skill, technology, management expertise and human resource development through international training and collaboration.
Macaulay, (2012) asserted that Nigeria’s foreign investment can be traced back to the colonial era, when the colonial masters had the intention of exploiting our resources for the development of their economy. There was little investment by these colonial masters. With the research and discovery of oil foreign investment in Nigeria, but since then, Nigeria’s foreign investment has not been stable. The Nigerian governments have recognized the importance of FDI in enhancing insurance  and development and various strategies involving incentive policies and regulatory measure have been put in place to promote the inflow of FDI to the country. According to Lall, (2002), privatization was also adopted, among other measures, to encourage foreign investments in Nigeria. This involved transfer of state-owned enterprises (manufacturing, agricultural production, public utility services such as telecommunication, transportation, electricity and water supply), companies that are completely or partly owned by or managed by private individuals or companies. Shiro (2009) noted that since the enthronement of democracy in 1999, the government of Nigeria has taken a number of measures necessary to woo foreign investors into Nigeria. These measures, he noted, include the repeal of laws that are inimical to foreign investment growth, promulgation of investment laws, various oversea trips for image laundry by the President among others.
1.2    Statement of the Problem
Foreign direct investment, or FDI, is investment, a controlling ownership, of a foreign company in a country other than the one it is based in. It affects the home country inevitably. But economists do not have a general agreement as to which of its effects are more: positive or negative. Some term it favorable for insurance  while others disagree and stand in its opposition. The advocates believe it creates employment opportunities, impart technical sails to the residents, and, above all, increases the, which we call insurance , of the host country.
In the other hand, it is said that through this FDI these investors manipulates scarce productive resources of the host country though it has some positive effects, yet they are minimal as compared with the negative ones. Nonetheless, its effects desirability vary from country to country. In case of Nigerian, it is needed because it can play a significant role in insurance .
However going by the latest ranking of 189 countries by World Bank ease of doing business global index, 2015 edition, Nigeria scored 169th position out of 189 countries ranked [9]. This result showed that Nigeria lacks the capacity to grow its local industries let alone attract reasonable foreign direct investment especially in the face of dwindling oil price and exchange rate volatility. The World Economic Global Competitive Index 2015, ranked Nigeria as 38th out 144 countries with 286.5 billion US dollar using gross domestic product as an indicator [10]. This result is nothing to cheer about as the same index ranked Nigeria, 111th out of 144 countries also using GDP/Per Capita Income as an indicator. This implies that even as gross domestic product improves, its result does not reflect on the living standard of the citizens.
Thus, this study the impact of foreign direct investment on insurance  of Nigeria.
1.3    Objectives of the Study
The aim of the study is to analyze the role of insurance in attracting I and Foreign Direct Investment of Nigeria (2005-2018).  The study seeks to achieve the following objectives:
1.    To analyze the relationship between Insurance  and Foreign Direct Investment
2.    To determine the relationship between Foreign Direct Investment on insurer premium ratio.
3.    To determine the significance relationship between Foreign Direct Investment on growth of Life assurance penetration.
4.    The challenges and solution to foreign direct investment on Nigeria.
1.4     Research Questions
The following research question were drafted
1.    What is the extent of the relationship between Insurance and Foreign Direct Investment?
2.    What are the relationship between Foreign Direct Investment on insurer premium ratio?
3.    What are the significance relationships between Foreign Direct Investment on growth of Life assurance penetration .
4.    What are the recommended challenges and solutions to foreign direct investment on Nigeria?
1.5    Research Hypotheses
The research will null hypotheses were group into three categories, based on the research objectives.
Group I: Main Hypothesis
H1:     There is no relationship between Insurance and Foreign Direct Investment.
Group II: Main Hypothesis
H2:     There is no relationship between Foreign Direct Investment on insurer premium ratio.
Group III: Main Hypothesis
H3     There is no significance relationship between Foreign Direct Investment on Life assurance penetration.
1.6    Scope of the Study
The scope of the study can be outlined as follows:
i.    The study covered health, sport and education of selected years of Nigeria.
ii.    The study covered eight years, from 2005 to 2018.  Thus, the results were applicable only within the stated time frame.
iii.    Only foreign direct investments in five sectors are considered in the main analysis.
1.7    Significance of the study
The significance of this study and the period under review may be highlighted in the following ways:
-    The main thrust of this study is therefore to make available facts which are fundamental basis for repositioning investment by foreign companies to achieve maximum impact in a country by dearth of modern technology and employment opportunities.
-    The study is important being an attempt to reduce the dearth of empirical research in this area.  Both at the local and foreign scenes, past studies, in foreign investment have focused on policy reforms, trade regulations, finance and other miscellaneous are without specific investigation.
-    Further the study will contribute to the existing frontiers of knowledge in the theory and practice of foreign direct investment as a field as well as serve as a source of reference for future researchers.
-    The study cover period of 2005-2018 covered 9years of the five. The study witnessed both democratic policies and military decrees as it affects foreign investment in Nigeria.

1.9     Limitations of the Study
The following assumptions are relevant to the applicability of the result of this study:
•    The researcher will obtain the published data from the apex bank, Central bank of Nigeria (CBN) and World Bank data base.
•    Where and when the need arose, the researcher solicited the assistance of Data Analyst in re-arranging the data for ease of analysis.
•    The dependent (Y-axis) variable of the study was: health education, and sports the main independent (X-axis) variable of the study was foreign direct investment.
•     Funds are recorded as foreign private investments were spent entirely for investment, therefore embezzlement of funds was not considered.
•    The final output of this investigation is only valid if the study is recorded within the same time frame.

1.2    Definition Of Terms
1.    Foreign Direct Investment:    This is the existence of controlling ownership by a firm from one country over a firm in another country through new investments or acquisition.
2.    Multination Corporations:    A corporation with multi-country affiliates, each of which formulates its own business strategy based on perceived market differences
3.    Developing Countries:    Developing countries are those for which some reasons have backwardness in developing their economic resources with the attendant result that their people have a lower standard of living than that enjoyed in the more advanced countries of Europe and America (Handson 2009).  They are also called third world countries.
4.    Balance of Payment:    Refers to a systematic record of all transaction between the residents of the reporting country (Nigeria in this case) and residents of foreign countries during a given period of time usually one year.
5.    Employment:    By employment, we mean the state of being gainfully engaged by a multinational corporation.
6.    Social Responsibility:    This is the ethical measures taken by a corporation to see that its activities is not harmful to the lives and properties of host communities.  It can also be economic, legal or discretionary measures desired from the corporation by their communities.
REFERENCES
Lall, W. (2002). A Challenge to the Stage Theory of the Internationalization Process", in, Buckley, P.J * Ghauri, P [Edit]: The Internationalization of the Firm; A Reader, Academic Press
Macaulay, E. (2012).  Foreign Direst Investment and European Integration: The Evidence from the Formative Years of the European Community", in, JCMS, vol. 28, No. 3,
Onu, T. (2012).  Foreign Direct Investment in Central Europe since 1990: An Econometric Study", in, National Institute Economic Review, no. 156
Residency Review (2014.) Foreign Direct Investment in the European Economy: Some Policy Issues", in, Oxford Review of Economic Policy, vol. 9, no. 2,
Shiro, F. (2009).  The Determinants of US Direct Investment in the EEC", The American Economic Review,
Todaro, O. (2007). The Determinants of Foreign Direct Investment in Transforming Economies: Empirical Evidence for Hungary and China", in, Weltwirtschaftliches Archiv, vol. 131,
World Bank, (1996). Foreign Direct Investment in a Small Open Economy: The Case of Greece", in, Economia Internazionale