Study of the Effect of Fiscal Policy on Business Investment Climate in Nigeria’s North West Zone

Fiscal policy directly shapes business investment decisions, and examining its effect on the investment climate in Nigeria's North West geopolitical zone provides evidence for business-friendly policy reform in the region. This study examined the perceived effects of Nigerian federal and state fiscal policies on business investment decisions among 200 business owners and investors in Kano, Sokoto, and Zamfara States. Fiscal policy variables assessed included corporate tax rates, tax incentives, government spending on infrastructure, and public debt levels. Investment climate was measured by investor confidence index, new business registration rates, and capital expenditure intentions. Descriptive statistics, Relative Importance Index, and regression analysis were employed. Results showed that inadequate infrastructure spending was the most significant fiscal policy constraint on investment (RII = 0.89). Multiple taxation (including state, local government, and agency levies) ranked second (RII = 0.86), followed by policy inconsistency (RII = 0.83). Tax incentives were viewed positively but had low awareness among small business investors (only 34% were aware of applicable exemptions). Security-related public expenditure needs were cited by 78% of investors in Zamfara as a context-specific investment deterrent beyond conventional fiscal policy channels. The study concludes that fiscal policy improvement in the North West zone must prioritise infrastructure investment predictability and harmonisation of multiple taxation to meaningfully improve the investment climate.

Keywords: fiscal policy, investment climate, business investment, North West Nigeria, multiple taxation