Determinants of Private Investment in Nigeria

Abstract

This study investigates the determinants of private investment in Nigeria. Employing time series data for the period 1990 to 2020 gotten from the Central Bank of Nigeria Statistical Bulletin and World Development Indicators, the Auto-Regressive Distributed Lag Model (ARDL) and the Error Correction Mechanism estimation techniques were used to test private investment as the dependent variable and interest rate, money supply, credit to the private sector, inflation rate, and regulatory quality index as the independent variables. The results showed that all variables were correctly signed, and had statistical significance in explaining private investment in Nigeria during the period of study. The study, therefore, encouraged low interest rates to support and enhance lending to the private sector needed for investments, a control of rising inflation rate, monetary authorities developing and implementing policies to increase credit allocated to the private sector, creating and implementing sound policies and laws to support and encourage private sector development as recommendations.