Tax Incentives and Foreign Direct Investment Inflows in Nigeria: A Time Series Analysis

This study examines the effect of tax incentives — specifically tax holidays and pioneer status — on foreign direct investment (FDI) inflows in Nigeria from 1990 to 2023, controlling for global factors, domestic economic factors, market-specific factors, institutional factors, and policy factors. Employing time series regression analysis with robust post-estimation diagnostics, the study draws on annual data from the Central Bank of Nigeria (CBN), the Nigerian Investment Promotion Commission (NIPC), the World Bank, and the International Monetary Fund (IMF). The findings reveal that while tax incentives exert a statistically significant positive effect on FDI inflows in the short run, their long-run efficacy is conditioned by institutional quality and macroeconomic stability. These results carry critical implications for tax policy design in emerging economies, particularly resource-dependent states seeking to diversify their investment base. The study contributes to the literature by offering a disaggregated analysis of tax incentive instruments within a multi-factor control framework, filling a methodological gap in the Nigerian FDI literature.