ASSESSING THE IMPACT OF TAX INCENTIVES TO

ATTRACTING FOREIGN INVESTMENTS INTO

NIGERIA, A CASE STUDY OF LAGOS STATE,
NIGERIA.

BY

FRANK KELVIN CHIADIKA

STUDENT ID: 7744

PROJECT REPORT SUBMITTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS
ADMINISTRATION IN FINANCE DEPARTMENT OF BUSINESS
ADMINISTRATION OF MANAGEMENT SCIENCES UNIVERSITY OF
NICARAGUA CENTRAL AMERICA, NICARAGUA.

UNDER THE GUARDIANCE OF

INTERNATIONAL INSTITUTE OF MANAGEMENT
& TECHNOLOGY STUDIES (IIMTS)
DUBAI UNITED ARAB EMIRATE.

DECEMBER, 2015
CERTIFICATE
This is to certify that the project work is a bonafide record of independent research work
carried out during the academic year (2013 2015) by Frank Kelvin Chiadika, Student
ID: 7744; under my supervision and submitted to International Institute Of Management
& Technology in partial fulfillment for the award of the Degree of MASTER OF
BUSINESS ADMINISTRATION IN FINANCE.

_____________________ ___________________
K.M. VENKATESH KAMATH Date
Manager-student Affairs & coordinator

_____________________ ___________________
ALFIA SAYED Date
Coordinator Student Affairs

_____________________ ___________________

DEAN Date

_____________________ ___________________
External Examiner Date
 ABSTRACT
The purpose of this study was to assess impact of tax incentives on attracting foreign

direct investment (FDI) into Lagos State, Nigeria. In specific terms the objectives of the

study were to: (i) Identify the major tax incentives available to foreign investors in Lagos

State; (ii) Investigate the quantity of FDI into Lagos State today.(iii)Establish the

trends in the inflow of FDI in recent years; and (iv) Determine how strong the impact of

tax incentives on the inflow of FDI into Lagos State is four research questions and three

null hypotheses were raised to guide the study. Then a review of the related literature

was done. After that a descriptive research design, with the survey method was adopted

for the study. In the survey, sixty senior civil servants were selected from a purposive

sample of four Ministries in Lagos State Finance, Industry, Commerce and Economic

Planning and Development. A researcher-designed instrument was administered on the

potential respondents. At the end, forty five senior civil servants returned usable

questionnaire. The responses of these people were analyzed based on the four

research questions and the three null hypotheses. Descriptive statistics (namely

frequencies, percentages, ranking and means) as well as inferential statistic (students

t) were employed. The main findings of the study were: (i) The forty senior civil servants

in the sample mentioned thirteen types of tax incentives used to attract foreign direct

investment (FDI) into Lagos State. The major ones were six in number, including tax

holiday, accelerated depreciation, tax allowance and interest subsidy; (ii) The

respondents perceived the quantity of inflow FDI into Lagos State to be quite big; (iii)

The trends in the inflow of the FDI into Lagos State were said to be fluctuating in recent

years; (iv) The impact of tax incentives on the inflow of FDI into Lagos State was judged

to be quite high; and (v) The assessments by the more experienced, the more
academically qualified and the professionally qualified of the impact of tax incentives on

the inflow of FDI was high. The assessment of the qualified, the experienced and the

professionally unqualified was quite high. The difference among each of three pairs was

statistically significant.
TABLE OF CONTENTS

Title Page Page

Certificate i
Dedication ii
Acknowledgments iii
Abstract iv
Table of Contents v

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study 1
1.2 Statement of the Problem 5
1.3 Research Questions 6
1.4 Purpose of the Study 7
1.5 Hypotheses 7
1.6 Scope of the Study 7
1.7 Significance of the Study 8
1.8 Clarification of Major Terms 9

CHAPTER TWO: REVIEW Of THE RELATED LITERATURE

2.1 Types of Private Foreign Investment 10
2.2 Theoretical Framework On Foreign Direct Investment 11
2.3 Foreign Direct Investments and Development: Proponents
and Anti proponents 12
2.4 Foreign Direct Investment in Africa 15
2.5 Factors Driving FDI Inflows To West African Countries 17
2.6 Determinants of FDI in Nigeria 20
7
2.7 Nigeria Corporate Tax Incentives 22
2.8 Empirical Studies 27

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Area of the study 31
3.2 Research Design 31
3.3 Population 32
3.4 Sample Size 32
3.5 Sampling Technique 32
3.6 Instrumentation 32
3.7 Validation of the Instrument 33
3.8 Reliability of the Instrument 33
3.9 Procedure for Data Collection 33
3.10 Procedure for Data Analysis 33

CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSION

4.1 Description of the Characteristics of the Respondents 34
4.2 Answering of the Research Questions 35
4.3 Testing the Null Hypotheses 42
4.4 Findings 44
4.5 Discussion of Findings 44

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary 46
5.2 Conclusion 47
5.3 Recommendations 48
5.4 Suggestions for further studies 50
References 52
Appendix - Questionnaire 56

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