1.0
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The
internet has become a valuable tool for governments, businesses, military,
associations and individuals. Cyberspace is constantly evolving, so too is the
threat of cyber crime on national security, prosperity and quality of life of
the citizenry and the world as a global village. Just like governments of all
sovereign nations, the government of Nigeria is committed to protecting
Nigerians from the threat of cybercrime.
Cybercrime
is generally defined as a criminal offence involving a computer as the object
of the crime (hacking, phishing, spamming), or as the tool used to commit a
material component of the offence (child pornography, hate crimes, computer
fraud). Criminals can also use computers for communication and data storage.
The
internet’s rapid diffusion and digitations of economic activities have led to
the emergence of new breed of criminals. In recent years, economic, political
and social impacts of these cyber criminals’ activities have received
considerable attention. Individuals, businesses and government rightfully worry
about their systems, network and IT infrastructure.
Considering
the pattern of cybercrime, it is apparent that many underlying assumptions are
flawed, unrealistic and implausible to explain with this novel form of
criminality. The empirical record regarding cybercrime patterns and strategy to
avoid and fight the crimes run counter to the functioning of the cyber world.
There
are various ways to gain access to information in cyberspace. Attackers can
exploit vulnerabilities in software and hardware. They can exploit security
vulnerabilities by tricking people into opening infected emails or visiting
corrupt websites that infect their computers with malicious software. They can
take advantage of people who fail to follow basic cyber security practices,
such as changing their passwords frequently, updating their antivirus
protection on a regular basis, and using only protected wireless networks. At
the turn of the 21st century, Nigerian internet penetration levels took a
running jump. Whereas the number used to be less than 5% in 2002 – 2003, it
stood at over 40% by the end of 2015 and the growth is only poised to
accelerate. The advent of mobile telephones on the Nigerian market played a
major role and continues to be a key driver in economic advancement.
The VSAT deployments that were once the only source of dependable
internet connectivity has since been rendered quaint and antediluvian, compared
to the untapped capacity of the undersea broadband cable that have been brought
to the coast of Nigeria since 2009. As time wears on, competition and market
forces continue to act on the industry, constantly nudging quality up and costs
down for the average consumer.
However, the rise of the internet in Nigeria has come with an
unintended consequence – global notoriety as a haven of cybercrime. Back in the
90s, fraud in the Nigerian society was popularly called 419 in reference to the
criminal code that framed the criminal justice system in Nigeria. At the time,
persons who were arrested in connection to that law were labelled ‘419’.
Enforcement and a ponderous criminal justice system meant that the rampant
practice of 419 was already a constant source of grief. Then along came the
internet, shortly after which a number of tech-savvy cons successfully
“exported” the 419 concept. While the popular 419 reference has since been
extended to include cyber criminals, in Nigeria the name “Yahoo-Yahoo” is the most
familiar informal usage that is employed to speak of people who perpetrate
scams online.
1.1.1. Foreign Direct Investments (FDIs)
Foreign Direct Investments (FDIs) is an investment made by a
company or entity based in one country, into a company or entity based in
another country. FDIs differ substantially from indirect investments such as
portfolio flows, wherein overseas institutions invest in equities listed on a
nation's stock exchange. Entities making direct investments typically have a
significant degree of influence and control over the company into which the
investment is made. Open economies with skilled workforces and good growth
prospects tend to attract larger amounts of foreign direct investments than
closed highly regulated economies.
An investing company may make its overseas investment in a number
of ways - either by setting up a subsidiary or associate company in the foreign
country, by acquiring shares of an overseas company, or through a merger or
joint venture.
1.2. STATEMENT OF THE PROBLEM
Cybercrime and espionage cost the global economy upwards of 500bn
annually and are the main contributors for dragging down economic growth across
the world. A study by the security firm
McAfee and the Centre for Strategic and International Studies (CSIC) also
revealed that the US, the world's largest economy loses about $100bn (€76bn,
£65bn) from cyber crimes and espionage, including loss of key business data and
intellectual property. In the US, the malicious activities are also resulting
in the loss of as many as 500,000 jobs in connection with the loss of
intellectual property and sensitive business information.
government agencies is a big business for perpetrators. These
losses could just be the cost of doing business or they could be a major new
risk for companies and nations as these illicit acquisitions damage global
economic competitiveness and undermine technological advantage.
The report adds that costs are expected to rise further as the
size and intensity of hacking continue to grow. In a press release on cybercrimes, financial
and geographic growth shows no slowdown during the Global Economic Crisis by
Symantec one of the world's largest software companies, its Internet Security Threat
report revealed continued growth in both the volume and sophistication of
cybercrime attacks. Notable trends highlighted in this year's report showed the
following:
·
An increase in the
number of targeted threats focused on enterprises: Given the potential for monetary gain from compromised corporate
intellectual property (IP), cybercriminals have turned their attention toward
enterprises. The report found that attackers are leveraging the abundance of
personal information openly available on social networking sites to synthesize
socially engineered attacks on key individuals within targeted companies.
·
Attack toolkits make
cybercrime easier than ever: Cybercrime
attack toolkits have lowered the bar to entry for new cybercriminals, making it
easy for unskilled attackers to compromise computers and steal information. One
such toolkit called Zeus (Zbot), which can be purchased for as little as $700,
automates the process of creating customized malware capable of stealing
personal information. Using kits like Zeus, attackers created literally
millions of new malicious code variants in an effort to evade detection by
security software.
·
Web-based attacks
continued to grow unabated: Today’s
attackers leverage on social engineering techniques to lure unsuspecting users
to malicious websites. These websites then attack the victim’s Web browser and
vulnerable plug-ins normally used to view video or document files. Dramatic
growth in the number of Web-based attacks targeted at PDF viewers; this
accounted for 49 percent of observed Web-based attacks.
·
Malicious activity
takes root in emerging countries: The report
saw firm signs that malicious activity is now taking root in countries with an
emerging broadband infrastructure, such as Brazil, India, Poland, Vietnam and
Russia. These countries moved up the rankings as a source and target of
malicious activity by cybercriminals. The findings from the report suggest that
government crackdowns in developed countries have led cybercriminals to launch
their attacks from the developing world, where they are less likely to be
prosecuted.
1.3 THE OBJECTIVE OF THE STUDY
Nigeria as part of the nations classified under developing
countries has benefited immensely from Foreign Direct Investments since the
middle 1990's. It goes without saying that the country's economy in recent
times have had advancements in Information and Communications Technology which
can be seen in every facet of its industries. This growth has also attracted
innumerable crimes which has directly and otherwise affected the influx of
Foreign Direct Investments, especially in the form of Cyber crime.
Taking an in- depth analysis of the said subject matter, it is apt
and of utmost interest to pose some questions that will enable us shed
additional light for posterity sake. Has the increase in cyber crimes reduced
the rate of Foreign Direct Investments? Is there a direct correlation between
cybercrime and the reduction in FDI in Nigeria particularly in recent times?
Can we say that the negative impact of cyber crime has in-turn decelerated
National Development? This project is underpinned on the conceptual analysis of
cybercrimes’ adverse effect on FDIs. It goes further to establish a nexus
between cybercrime and technological advancement with a view to contextualise
the answers in lieu of the objectives, and appraise the situation:
1.
To comprehend how cybercrime is affecting and to what extent it has affected
foreign direct investments in Nigeria
2.
To study the factors or determinants that play vital roles in attracting FDI
inflow in Nigeria and other African economies
3.
To get acquainted with the current policy framework for foreign direct
investment in Nigeria in the wake of cybercrime
4. To analyze what strategies Nigeria and African countries should
follow to attract higher Foreign Direct Investments in future in the wake of
cybercrime.
1.4 JUSTIFICATION FOR THE RESEARCH
The cost of cyber crime to any nation is enormous and can
completely ruin the country's economy if the proper security strategies are not
put in place. Foreign Investments into that economy can begin to dwindle.
Several governments of the world are continuously carrying out research to
improve their cybercrime attacks counter-measures. The Nigerian Government set
up the cybercrime committee which formed the Nigerian Cybercrime Working Group
(NCWG), so as to accelerate the implementation of its Cybercrime research
efforts, the Nigerian National Assembly has also passed the Cybercrime Bill
into law.
The impact to society has become unsustainable, considering the
global economic crisis. It’s necessary to work together to avoid the costs the
global community suffers, which we can no longer sustain. The risk of business
collapse is concrete, due to the high cost for enterprises in mitigating
counter measures, and the damage caused by countless attacks.
Cyber crime is the fastest growing crime in the world at large
(Interpol, 2013) with millions of people being affected every day. The
financial losses accruing from cybercrime fraud is doubling every year
(Florence Tushabe, 2013). Yet, less than half of the cybercrime instances are
reported to the authorities. This means that the situation is worse than it
seems to be.
This research hereby tends to show Foreign Direct Investments and
National Economic Development trends in Nigeria and how it's has been affected
by Cybercrime.
1.5 LIMITATIONS TO THE
RESEARCH
None was defined during this research.
1.6 SCOPE OF THE RESEARCH
The scope of this report was not restricted to the effects of
cyber crimes on Foreign Direct Investments and National Development. To present
a holistic view of the topic, the types of cyber crime, cyber terrorism and the
Nigeria economy and how to combat cyber crimes are included in the report.
The research was carried out in Nigeria and spanned across 4 years
from 2013 to 2016 and covered the following
·
Foreign Investments/Capital
Importation by countries into Nigeria;
·
Foreign Investments by
Nature of Businesses;
·
Foreign Investments by
Location of Business in Nigeria;
·
Foreign Investments by type
of Investments.
Data was obtained directly from Central Bank of Nigeria, National
Statistics Bureau and other Nigerian Banks on their Foreign Direct Investments.
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