EFFECT OF FOREIGN DIRECT INVESTMENT ON PERFORMANCE IN THE TELECOMMUNICATION INDUSTRY IN SOUTH-EAST, NIGERIA

ABSTRACT

The study investigated the Effect of Foreign Direct Investment (FDI) on the Performance of the Telecommunication Industry in South-East, Nigeria.  It sought to: (i) determine the impact of technology on productivity in telecommunication firms in South-East, Nigeria. (ii) ascertain the effect of competition on efficiency in the telecommunication firms, (iii) assess the effect of capital on profitability in telecommunication firms.The population of the study was 4241 staff of six telecommunication service providers namely Airtel, Etisalat, MTN, Glo, Visafone, and Starcomms. The sample size of 384 was obtained using Freund and Williams’ formula.  Stratified sampling was used to select respondents from each of the selected institutions. Data were collected using questionnaire designed on a 5- point Likert scale.  To establish the reliability of instrument, a test retest method was adopted and the value obtained was 0.90 indicating that the test instrument was highly reliable. The data obtained were presented in tables analyzed accordingly and the corresponding values were expressed in percentages. All the hypotheses were tested using simple regression approach at 5% error. The findings revealed that: Technology had a significant positive impact on productivity in telecommunications firms in South-East, Nigeria (r = 0.957, p < 0.05); Competition had positive effect on efficiency in the telecommunication firms (r = 0.944, p < 0.05); and Capital had significant positive effect on profitability in telecommunication firms in South-East, Nigeria (r = 0.894, p < 0.05). The study concluded that FDI specifically had the effect of enhancing productivity, improving efficiency and ensuring profitability in the telecommunication firms, South East. The study recommended that the focus of every foreign direct investment, especially in the telecommunications industry in South-East, Nigeria should be technological advancements/innovations, better competition and provision of capital; Telecommunications firms that are the target of any FDI should ensure that its manpower is equipped and trained to handle the technology that is being brought as a result of the FDI; Telecommunication firms should ensure they avoid/minimize waste of resources; Telecommunication firms that are the objects of FDI, should also focus on the effective utilization of capital with emphasis on ensuring return for money invested.