Impact of Terrorism on Foreign Direct Investment in Nigeria

Ukwueze, Ezebuilo R.; Asogwa, Henry T.; Nwodo, Ozoemena Stanley; Ogbonna, Oliver E.

doi:10.1108/978-1-78769-919-920191020

Cited by 3 publications

(3 citation statements)

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Section: Model Results and Discussionmentioning

confidence: 99%

“…Foreign direct investment (FDI) in Nigeria has also dropped significantly over the years due to terrorism. Such a drop is disadvantageous for the firms that depend on some form of backward or forward linkages with FDI activities (Ukwueze et al, 2019). Second, some of the Nigerian government's laws and regulations in response to terrorism have had disruptive effects on several economic activities.…”

Section: Baseline Resultsmentioning

confidence: 99%

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Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Okafor

Calderon

2022

IJOEM

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PurposeThis paper investigates the relationship between terrorism and firm financial performance in Nigeria. The country has become one of the riskiest countries in Sub-Saharan Africa due to the intensity of recent terror attacks. Also, there is a growing focus on the importance of firms, given firms' economic contribution towards growth, employment and economic and industrial transformation. However, no study has tried establishing a relationship between terrorism and firm financial performance. Therefore, providing empirical proof of this relationship is the primary purpose and motivation of this paper.Design/methodology/approachData from the World Bank Enterprise Survey (WBES) and the Global Terrorism Database (GTD) were used for this study. The baseline analysis was estimated using the pooled ordinary least squares regression technique. For robustness checks, the fixed effects technique was used to control for heterogeneity across the authors' sample of firms and unobserved factors that are time-invariant, while the IV technique was employed to control for any potential endogeneity.FindingsThe results obtained from the regression analysis were robust to different econometric estimations and approaches. Terrorism was found to have a consistent and significant negative impact on firm financial performance. Furthermore, the marginal effect of terrorism on firm performance was more substantial when state-level terrorism data were used.Originality/valueStudies often focus on the impact of political instability (which is a measure subjectively based on perception) on foreign direct investment or on the activities of multinational corporations. The authors' research is new in supplying evidence of the relationship between terrorism (an objective measure) and the financial performance of manufacturing firms in Nigeria. Methodologically, this study also employed spatially distributed incidents of terrorism within the country. This is because incidents of terrorism are often spatially distributed within a country (i.e. province or state). This will provide new evidence of the effects of within-country variations of terrorism on firm financial performance.

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Section: Model Results and Discussionmentioning

confidence: 99%

Section: Baseline Resultsmentioning

confidence: 99%

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Okafor

Calderon

2022

IJOEM

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“…Despite this low performance in the development of the financial sector in the continent characterised by frequent terrorist attacks, studies on the effect of terrorism in Africa have neglected it impact on financial development. In fact, studies have rather focused on its impact on: capital flight (Efobi and Asongu, 2016;Asongu and Amankwah-Amoah, 2016); financial flows (Onanuga et al, 2020); governance (Asongu and Nwachukwu, 2017a); public debt (AbidandSekrafi, 2020); FDI (Efobi, Asongu, and Beecroft, 2018;Ukwueze et al, 2019); agriculture (Noubissi and Njangang, 2020); regional integration (Elu and Price, 2014) and trade (Asongu and Leke, 2019). Accordingly, the extant literature that has established the link between terrorism and financial development in Africa is sparse.…”

Section: Introductionmentioning

confidence: 99%

The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa

Asongu

Nchofoung²

2021

SSRN Journal

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This study empirically verifies the effect of terrorism on financial development and how globalisation and governance modulate the incidence of terrorism on financial development in Africa. Two terrorism indicators are adopted for this study, namely, the: number of terrorism incidences and number of terrorism deaths. The methodology involves the pooled data technique running from 1996-2018 for 34 African countries. The results from the POLS, Driscoll-Kraay and the Newey-West standard error corrections show that terrorism is detrimental to financial development. From the interactive regressions, three major tendencies are apparent. First, terrorism dynamics consistently have an unconditional negative effect on financial development. Second, the globalization and government dynamics modulate the terrorism dynamics to broadly induce a negative net effect on financial development. Third, policy thresholds at which the modulating variables reverse the net effect on financial development from negative to positive are: (i) 71.61572 trade (% of GDP) and 13.97872 FDI (% of GDP) for the incidence of terror and (ii) 1.16201 trade (% of GDP) for terror deaths. The computed thresholds make economic sense and worthwhile in terms of policy implications because they are within statistical range. The result is robust to alternative measures of terrorism and financial development. Policy implications are discussed.

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Insurgency, Political Risk, and Foreign Direct Investment Inflows in Nigeria: A Sectorial Analysis

Danjuma

2022

CBN-JAS

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This study examines, among others, the effect of terrorism, political violence, corruption, and religious tension on FDI inflows to the banking, construction, manufacturing, oil and gas, and telecommunication sectors in Nigeria. Thus, empirical models were estimated using the fully modified ordinary least squares (FMOLS) technique. The study spans from 2008Q1 to 2017Q4. Findings show that terrorism adversely affects FDI inflow to telecommunication sector, while corruption positively impacts on the oil and gas sector. Thus, this study among other things, recommends the intensification of effort in the war against terrorism and strengthening of relevant anti-graft agencies to adequately fight corruption in Nigeria in other to enhance the country’s attractiveness to FDI inflow.

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Impact of Terrorism on Foreign Direct Investment in Nigeria

Cited by 3 publications

References 10 publications

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

Empirical evidence of the relationship between terrorism and firm financial performance in Nigeria

The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa

Insurgency, Political Risk, and Foreign Direct Investment Inflows in Nigeria: A Sectorial Analysis

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