Cyber-Risk and Digital Governance and Foreign Direct Investment in Nigeria
Abstract
The paper investigated the longitudinal impact of multifaceted cyber-threats on Foreign Direct Investment (FDI) inflows in Nigeria (2015–2024). The paper specifically examined the influence of cyber-risk exposure, digital governance, and political stability, while controlling for exchange rate volatility. The ex-post facto research design was employed with annual time-series secondary data sourced from the Nigeria Inter-Bank Settlement System, International Telecommunication Union and the Worldwide Governance Indicators (World Bank). The ARDL regression technique was employed to estimate the long and short run parameters of the model using E-views software. Empirical results confirm a long-run equilibrium relationship among the variables (F = 5.876 > upper bound). Specifically, cyber-risk exposure (α = -0.234, p < 0.05) and exchange rate volatility exert significant negative pressures on FDI inflows. Conversely, digital governance and political stability (α = 0.876, p < 0.01) serve as primary drivers for FDI inflows. The Error Correction Term (ECT = -0.456) suggests that the market adjusts to cybersecurity shocks at a moderate pace, with 45.6% of disequilibrium corrected annually. The study concluded that cyber-vulnerability has emerged as a primary obstacle to Nigeria’s digital economy, acting as a deterrent to foreign direct investment inflows in the country. Policy recommendations emphasize the fortification of national data protection frameworks and the integration of AI-driven threat detection to mitigate digital risk and attract secure foreign investment.