FOREIGN DIRECT INVESTMENT (FDI) AND FINANCIAL PERFORMANCE OF FIRMS IN NIGERIA

Abstract

This research examines how Foreign Direct Investment (FDI) influences the financial performance of firms in Nigeria, with particular emphasis on indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Using a descriptive survey approach, data were gathered from firms operating in major sectors including oil and gas, telecommunications, manufacturing, and banking. Quantitative methods were employed to analyse the link between FDI inflows and firm-level financial outcomes, considering mediating factors such as absorptive capacity, infrastructure quality, and macroeconomic stability. The findings indicate that FDI positively affects asset use, equity returns, and overall profitability, although the scale of impact varies across industries and is shaped by institutional and economic contexts. The study concludes that the full benefits of FDI can be achieved through strong institutional support, enhanced infrastructure, and initiatives that build firms’ absorptive capabilities. It recommends that policymakers in Nigeria introduce sector-specific incentives, reinforce regulatory frameworks, and invest in workforce development to better harness FDI for sustainable growth and improved corporate performance.