The Impact of Exchange Rate Volatility on Foreign Direct Investment (FDI) In Nigeria

By

ACKNOWLEDGEMENT

My thanks go out to all who have helped me complete this study and with whom this project may have not been possible. In particular, my gratitude goes out to friends, facilitator and family for extensive and helpful comments on early drafts. I am also deeply indebted to the authors who have shared my interest and preceded me. Their works provided me with a host of information to learn from and build upon, also served as examples to emulate.

DECLARATION

I, (Your name), would like to declare that all contents included in this thesis/dissertation stand for my individual work without any aid, and this thesis/dissertation has not been submitted for any examination at academic as well as professional level previously. It is also representing my very own views and not essentially which are associated with university.

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ABSTRACT

This research study is an attempt to study the relationship between the exchange rate volatility and the foreign direct investment. FDI in a country and a high degree of volatility in the exchange rate leads to streams of profits that are riskier. Till the time, this investment can be reversed partially; there will be a positive value to hold off the investment in order to acquire excessive information. There are limited potential direct investments; countries with an increased currency risk might lose on the foreign direct investments to the countries that possess currencies which are more stable (Anyanwu, 1992). A country that falls in this category, i.e. a greater degree of exchange rate risk, is Nigeria. Nigeria has a population of approximately 130 million people, has various natural resources, a climate that is favourable and has vegetation features (Bryne and Davis, 2003). This research study has explored the impact that exchange rate volatility has on the foreign direct investment in Nigeria. This research study has adopted a secondary quantitative research approach. The data for both the variables was calculated for the period of 10 years, i.e. from 2001 to 2011. The results of the regression analysis were interpreted and the results of the previous studies have been incorporated in this study as well. The results of this research study have shown that the there is a positive relationship between the exchange rate volatility and the foreign direct investment of Nigeria. The exchange rate volatility has an impact on the foreign direct investment of Nigeria.

TABLE OF CONTENTS

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 01: INTRODUCTION1

1.1 Background of the Study1

1.2 Aim and Objectives4

1.3 Research Questions4

1.4 Scope5

1.5 Justification for the Study5

1.6 Significance of the Study6

1.7 Layout of the Dissertation7

CHAPTER 02: LITERATURE REVIEW8

2.1 Introduction8

2.2 An Overview of the Exchange Rate Levels8

2.3 Exchange Rate Volatility13

2.3 The Importance and Nature of Foreign Direct Investment in Nigeria18

2.4 FDI and Exchange Rate Volatility19

CHAPTER 03: RESEARCH METHODOLOGY22

3.1 Introduction22

3.2 Research Method22

3.3 Overview of the Quantitative Research Method22

3.4 Overview of the Secondary Method of Research23

3.5 Justification for the Research Method24

3.6 Regression Analysis25

3.7 Variables25

3.8 Data26

3.9 Reliability26

3.10 Validity27

3.11 Ethical Implications27

3.12 Sources of Data27

3.13 Conclusion28

CHAPTER 04: DISCUSSION AND ANALYSIS29

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