THE ROLE OF ECOWAS IN PROMOTING FOREIGN DIRECT INVESTMENT: A CASE STUDY OF NIGERIA’S POLICY FRAMEWORK AND IMPLEMENTATION CHALLENGES

Abstract

Foreign Direct Investment (FDI) remains a critical driver of economic growth, industrialisation, technology transfer, employment generation, and sustainable development in developing economies. This study examines the role of the Economic Community of West African States (ECOWAS) in promoting FDI, using Nigeria as a case study to assess the effectiveness of regional investment frameworks and the challenges associated with their implementation. Adopting a qualitative desk-review approach, the study analyses relevant ECOWAS legal and policy instruments, including the Revised ECOWAS Treaty (1993), the ECOWAS Common Investment Market, the ECOWAS Investment Policy, the ECOWAS Trade Liberalisation Scheme, and the Protocol on Free Movement of Persons, Residence and Establishment. The analysis is anchored on Dunning's Eclectic (OLI) Paradigm to explain how regional integration influences investment decisions. The findings reveal that ECOWAS has established a comprehensive legal and institutional framework aimed at harmonising investment policies, facilitating regional market integration, protecting investors, and promoting private-sector development. However, the effectiveness of these initiatives in Nigeria is constrained by policy inconsistency, inadequate infrastructure, insecurity, weak institutional coordination, bureaucratic inefficiency, exchange-rate volatility, and governance challenges. The study concludes that while ECOWAS provides an enabling regional environment for investment promotion, sustainable FDI inflows depend largely on complementary domestic reforms that strengthen institutional capacity, improve macroeconomic stability, and enhance regulatory certainty. It recommends stronger implementation of ECOWAS commitments, improved infrastructure, enhanced governance, and closer policy coordination between regional and national institutions to maximise the developmental benefits of FDI in Nigeria and the wider West African region.