Insurance Sector Development and Foreign Direct Investment in Nigeria

Abstract

Aims: The study examined the impact of insurance sector development on foreign direct investment in Nigeria. Study Design: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets. Place and Duration of Study: Department of Banking and Finance, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria. The study was carried out between November 2019 to January 2020. Methodology: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets. The time series data was estimated using the least square technique. Results: The results indicates that; the total asset size of the insurance sector exerts a negative and statistically insignificant impact on foreign direct investment inflow to Nigeria, total insurance business investment exerts a positive and statistically insignificant impact on foreign direct investment inflow to Nigeria and finally, total insurance premium exerts a negative and statistically significant impact on foreign direct investment inflow to Nigeria. Conclusion: The study concludes that insurance sector development does not attract foreign investment inflow to Nigeria. The study recommends that the insurance sector should be revamped in order to absorb risk and uncertainty and be a vehicle for risk transfer and minimization. A policy of restructuring would help instil public confidence, boost insurance policy sales, increase insurance premium and invariably increase the availability of investible funds to boost economic activity. The study suggests that these would help attract foreign direct investment to meet domestic funding needs of Nigeria.