CHAPTER 1

 INTRODUCTION

1.1 Background

The challenges of growth and development have necessitated various economic experiments in Nigeria since independence. Development plans and a nationalistic indigenous approach were apparent in the first twenty– five years. Failure to meet fair and just expectations, given the potentials and resources of this country, has allowed a large room for foreign influences in the search for solutions, particularly since the mid–1980s. In both cases the prevailing economic philosophy was always reflected by the legal system as many laws were enacted which in form and content defined the regulatory principles for the relevant period.

As to foreign influences, the close of the last millennium brought about the fall of insular approaches to the management of the economies of nations and this is very significant for a developing country like Nigeria. Great advances in information technology, the opening up of Eastern Europe after the fall of communism, regionalization of economic concerns, globalization, deregulation, privatization and commercialization became realities to which nations could not be indifferent, particularly Nigeria, which after a period of prosperity brought about by the oil boom of the 1970s was in economic decline.

Since Nigeria retuned to civil rule in 1999 the government has been campaigning world-wide to attract foreign investment to the country. A similar campaign termed “economic diplomacy” by the administration of General Ibrahim Babangida did not yield success. Africa which had largely moved from dictatorship to democratic rule at the end of the last millennium began to pay attention to the problem of colonial rule, and this concern has led to two significant developments: the metamorphosis of the Organization of Africa Unity (OAU) into the African Union (AU), and the economic initiative of some of the leaders of the continent known as the New Partnership for Africa’s Development (NEPAD) which they intend should “provide an impetus to Africa’s development by bridging the gap in priority sectors to enable the continent catch up with developed parts of the world”.1 Outside Africa, the government of the United States of America under President Bill Clinton passed the Africa Growth and Opportunity Act (AGOA) in 2000 which offers incentives for African countries to open their economies and to have access to the American market.

There is thus an internal aspect in the use of the Nigerian legal system to attract foreign investments as is apparent in the various laws passed to address the matter, as well as the foreign aspects under the NEPAD and AGOA initiatives all of which are intended to work together to achieve the same end.

1.2 Origin of the Research Problem

In view of the attention being paid to the question of foreign investments in Nigeria, an inquiry into the legal regime under which they are regulated becomes relevant. There is not in Nigeria a foreign investment law, properly so called, as there are particular statutes which regulate the affairs of companies, the conduct of arbitration, or the protection of trade marks, for instance. In the absence of single law or code, the question which arises is: what are the provisions which regulate foreign investments in Nigeria?

Again, NEPAD and AGOA are not Nigerian initiatives. NEPAD has its

agenda, and it is the plan of its initiators that it should be a spring–board for development by African countries. By a presidential proclamation, the government of the United States has listed Nigeria as a country eligible to benefit from AGOA with effect from 2nd day of October 2002.2 But what are NEPAD and AGOA, and what are their relevant provisions on foreign investments as far as Nigeria is concerned?

Nigeria participated in the formation of NEPAD

The objective of the New Partnership for Africa’s Development is to consolidate democracy and sound economic management on the continent. Through the programme, African leaders are making a commitment to the African people and the world to work together in rebuilding the continent. It is a pledge to promote peace and stability, democracy, sound economic management and people– centered development and to hold each other accountable in terms of the agreements outlined in the programme.3

It approaches the development of Africa by proposing political reforms, focus on good governance, infrastructural and human resources development, resources mobilization and access to markets. It relies on a new relationship with industrialized countries and multilateral organizations. It creates a common forum of economic relationship between African countries on the one hand and the industrialized world and multilateral agencies on the other. It is also a goal–setting forum among African countries. Commitment by Nigeria to NEPAD means its plans and purposes should be brought to bear on the administration of the country in the relevant aspects, including foreign investments.

AGOA accords special trade and tariff status on numerous selected exports to the United States of America from certain African countries, of which Nigeria is one. Since its objective is the promotion of international trade through market access for the eligible countries, it would necessarily have impacts on Nigeria in terms of opportunities to invest in the relevant areas and to develop resources for facilitating trade between the two countries.

This may challenge the existing economic and legal orders to adjust themselves so as to take advantage of it.

These initiatives have their own standards. For Nigeria to take advantage of them there must necessarily be an interrelationship between Nigerian laws on the foreign investments and the standards of the initiatives. The question which arises is whether the state of Nigerian law on foreign investment meet the demands of these initiatives, or whether some other response is called for by the Nigerian legal system? This is particularly apposite since the key domestic laws have been enacted before 2000, whereas the foreign initiatives came up after. The totality of these questions constitutes the problems to be examined in this study.