Comparative Analysis of Regulatory Quality and Foreign Direct Investment ‎‎(FDI) Inflows in Nigeria and South ‎Africa

  • Authors

    • Oghenekparobo Ernest Agbogun Department of Banking and Finance, Dennis Osadebay University, Asaba, Delta State, Nigeria
    • Abass Akinsanya Zedcrest Investment Managers Limited, 65 Karimu Kotun Street, Lagos, Nigeria
    • Felicia Omowunmi Olokoyo Department of Finance, Professor of Finance, Covenant University. Ota, Nigeria
    https://doi.org/10.14419/aj73xt65

    Received date: September 23, 2025

    Accepted date: November 4, 2025

    Published date: November 14, 2025

  • Regulatory Quality (REQ); Foreign Direct Investment (FDI) Inflows; Exchange Rate ‎‎(EXR); Inflation Rate (IFR); GDP Growth Rate (GDPG)‎.

  • Abstract

    This study evaluated the effect of regulatory quality (REQ) on foreign direct investment ‎‎(FDI) inflows in Nigeria and South Africa from 1996 to 2023. The specific focus of the ‎research is to ascertain: (i) what REQ have on FDI inflow to both countries; (ii) whether REQ ‎affects FDI inflows into the South African economy than into to Nigerian economy. ‎REQ index was sourced from the WGI database (2023), FDI inflows were sourced from the ‎World Bank database (2023), while exchange rate (EXR), inflation rate (IFR), and gross ‎domestic product growth rate (GDPG) were sourced from the Central Bank of Nigeria Statistical ‎Bulletin (2023). The study adopted the Robust Regression Analysis (RRA). This comparative ‎study evidenced that though REQ is a key FDI inflows driver in both countries, its effect is ‎more evident in South Africa than in Nigeria. Similarly, GDPG plays a more meaningful role ‎in enhancing FDI inflows in South Africa than in Nigeria. However, Nigeria is highly ‎sensitive to inflationary pressures and exchange rate instability compared to South Africa. ‎Consequently, the Nigerian government needs to prioritize stabilizing its macroeconomic ‎environment over other policies. To achieve this, the Nigerian government should reduce ‎inflationary pressures and manage its exchange rate volatility. There is also a need for the ‎Nigerian government to strengthen the REQ and ensure policy consistency will further ‎improve investor confidence. Meanwhile, the South African government needs to address its ‎structural issues, which may deter the country from enjoying the developmental benefits of ‎FDI inflows. Overall, government of both countries needs to adopt targeted reforms to ‎improve absorptive capacity, infrastructure development, and efficient capital utilization will ‎be imminent to enjoy the developmental benefits of FDI‎.

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  • How to Cite

    Agbogun , O. E. ., Akinsanya , A. ., & Olokoyo, F. O. . (2025). Comparative Analysis of Regulatory Quality and Foreign Direct Investment ‎‎(FDI) Inflows in Nigeria and South ‎Africa. International Journal of Accounting and Economics Studies, 12(7), 451-460. https://doi.org/10.14419/aj73xt65