Investment In Nigeria Research Articles

Determinants of Private Investment in Nigeria

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.

Liberalization and Economic Growth in Nigeria

This study looked at how Nigeria’s financial markets, economic growth, and liberalization interacted between 1986 and 2020. To account for both the short-run and long-run effects, the study used an econometric model of autoregressive distributed lag modelling. To check the time series qualities, several diagnostic tests were carried out, including descriptive statistics, a correlation matrix, and a unit root test. Inferences were drawn at the 5% significant level. The study’s findings confirmed that while trade openness had a statistically significant negative impact on economic growth [ =-1.4391; P -value = 0.0000], foreign ownership of shares had a statistically favorable impact [ = 0.3027; P -value = 0.0000]. Additionally, it was shown that during the studied years, inflation was negative but minor in relation to economic growth [ = -0.0032; P-value = 0.5870]. Based on the study’s findings, it was advised that an enabling macroeconomic environment be present to make use of the advantages that financial liberalization and the financial market have to offer. Financial liberalization requires a favorable macroeconomic climate, according to studies. Macroeconomic instability makes information asymmetry worse and makes the financial sector more vulnerable. If the macroeconomic indicators are stable, foreign investors will be more eager to make investments in Nigeria.

Government Fiscal Policy and Foreign Direct Investment in Nigeria: An Application of VAR Model

Purpose: The aim of this paper is to examine the impact of key fiscal policy variables (government capital expenditure, government revenue, government recurrent expenditure, external debt and tax revenue) on foreign direct investment and to check if there exists a causal relationship between fiscal policy and Foreign direct investment in Nigeria. Approach/Methodology/Design: Times series Econometrics methods such as Vector Autoregressive (VAR) Model, unit root test, cointegration test, Lag selection test and Granger causality test on annual data obtained from CBN statistical bulletin and National Bureau of Statistics spanning 1985 to 2020 were used. Findings: The results of the unit root test showed that FDI, government capital expenditure, government revenue and tax were stationary at order one (1), while recurrent expenditure and external debt were stationary at order zero (0). Also there exists co-integration among all the variables in the model. The findings showed that fiscal policy has insignificant impact on foreign direct investment in Nigeria. Originality/value: The results of this paper give valuable information on the relationship that fiscal policy may have with foreign direct investment and a need for a well-articulated and coordinated fiscal policy to attract FDI in Nigeria for optimum growth and development.

Dynamics of capital flight components and domestic investment in Nigeria

Capital flight can cause challenges regarding the domestic availability of financial resources in sustaining domestic investment in Nigeria. The purpose of this study is to examine the connection between capital flight components and domestic investment in Nigeria. The study employed the autoregressive distributive lag model (ARDL) to analyze the time series data for Nigeria spanning from 1981 to 2018. The study found that changes in external debt, current account balance, and foreign direct investments have a negative effect on domestic investments in the short run and long run. Furthermore, the results obtained show that the intercept has a positive effect on domestic investment. The long-run coefficient of current account balance has a positive effect, while the other components of capital flight – foreign direct investment, external reserves and external debt – have a negative effect on domestic investment. The error correction coefficient is significant and conforms to the a priori expectation. Hence, the study concludes that growth in domestic investment can be achieved by regulating the components of capital flight within the desirable limits. The study recommends that emphasis should be placed on the components of capital flight to stimulate domestic investment for economic growth.

Mediating role of stock market volatility to evaluate asymmetries in the growth-degradation nexus in Nigeria

This study explores the mediating role of stock market volatility in the economic growth and environmental degradation nexus in Nigeria using data covering period from 1984 until 2020. The study uses Nonlinear Autoregressive Distributed Lag (NARDL) and a nonparametric asymmetric causality model. While the Wald test in model 1 reveals evidence of weak long-run asymmetric nexus between CO2 and economic growth however, findings in model 2 indicates that stock market volatility (SMV) exerts a strong asymmetric effect in growth-CO2 relation in the long-run. The result of nonlinear model validates the inverted U-shaped growth-degradation nexus consistent with EKC hypothesis. The finding in model 1 reveals that investment exerts a strong impact on CO2 in both the short-run and long-run. On the other hand, the results in model 2 show that the positive component of economic growth has a positive and significant impact on CO2 in Nigeria. However, the negative component of economic growth has a negative impact on CO2. Moreover, the dynamic causality model reveals: (i) a feedback causality between CO2 and the negative component of GDP; and (ii) a unidirectional causality flowing from CO2 to the positive component of GDP. Similarly, result of nonlinear causality test reveals a feedback causality between CO2 and GDP. The implication of the finding suggests that while asymmetric properties of economic growth must be controlled in efforts of promoting environmental sustainability, the stock market has a dedicated role to play in widening access to funds for green investment in Nigeria and other developing economies.

Impact of Ease of Doing Business on Foreign Direct Investment in Nigeria

The principal purpose of this study was to unravel the effect of ease of doing business on foreign direct investment in Nigerian from 1980 to 2020. To achieve these goals, detailed analysis of ease of doing business on foreign direct investment was carried out. The ARDL and Bounds Testing Approach were used to investigate the long run and short-run relationship between the variables. The result shows that ease of doing business in terms of access to electricity is a significant predictor of foreign direct investment up to the second period lag in the short run and in the long run as well. This implies that more investment is needed in power sector to further enhance energy generation and distribution in the country All other variables, however, seem not to be statistically significant in the long run. Furthermore, we found out that the variables are statistically significant in the short run with the exception of the initial and first period lag of gross domestic product, and the second period lag of access to electricity. The study recommended among others that there should be optimal control of trade through the borders of the economy. In this way, all cross-border economic activities are accounted for. Governments should be intentional about achieving better ease of doing business score and make targeted and reformed policies to this end. One of these ways is by reducing and simplifying procedures involved in registration, setting up a business, tax, licenses, and other matters that borders around businesses.

Corporate Outsourcing and Organizational Performance in Nigerian Investment Banks

Purpose: This study aims to ascertain the relationship between corporate outsourcing and investment bank performance in Nigeria. Research Methodology: The study adopted a survey research design because it is suitable and ideal for assessing how effective outsourcing strategy affects the corporate performance of investment banks in Nigeria. The population of the study was 280 staff from three investment banks in Nigeria. Using a purposive sampling technique, a sample size of 258 senior, medium, and junior staff of the sampled investment banks were selected as respondents. Multiple regression was used to test the hypotheses that were developed at a significance level of 0.05 percent. Results: The study showed that outsourcing has developed into a practical strategy and instrument for corporate organizations, particularly for Nigerian investment banks that are constantly looking to improve their firms' performance in the financial industry. To lower operating expenses and boost operational effectiveness in Nigeria’s investment banking sector, the management of Nigeria's investment banks should strategically allocate their resources and work with a partner. Limitations: The result of this study may not apply to other excluded categories because this study is limited to investment banks in Nigeria as of December 2022. It is expected that further studies should cover all the banks as well as insurance firms in Nigeria. Contribution: To leverage the services of other organizations and professionals outside of their core competencies for operational effectiveness and efficiency, corporate organizations in Nigeria, especially those in the financial sector, should incorporate outsourcing strategy into their corporate culture. Implications: Corporate outsourcing is pivotal to organizational performance if well applied.

Domestic and Foreign Debt Dynamics and Nonlinear Effects on Private Investments in Nigeria: Evidence with Asymmetric ARDL and Causality

The ultimate goal of the study was to determine the asymmetric and dynamic effects of public debt on private investment in Nigeria from 1990 to 2019. Because of the nature of data stationarity, the study then adopted the Nonlinear Autoregressive Distributed Lag (NARDL) modelling technique, which can produce both long-run and short-run parameter estimates of negative and positive decomposed values of domestic and foreign investment. The study used the Augmented Dickey-Fuller (ADF) test to ascertain the true order of integration for the study variables. The findings for the NARDL model showed a stable long-run cointegration among private investment, domestic debt, foreign debt, economic growth, inflation and real exchange rate for the study period. The results show an asymmetric relationship between domestic and foreign debts and private investments in the long run. The estimated results further show that private investment is a significant positive function of positive and negative changes in foreign debt, and a significant negative function of positive and negative changes in domestic debt in the long run, while there were significant instant positive s on impacts on domestic and foreign debt shocks in the short-run.

Government Debt Sustainability and Investments in Nigeria: Trends and Risk Thresholds amidst Macroeconomic Swings

The core idea behind government debt is to fund fiscal deficit, which is anticipated to drive economic investments. To a larger extent, this is not the case, as evidenced in the Nigerian context, where debt has risen so high with investment levels declining, thus questioning the government's ability to manage and sustain its debt to pursue vital investment needs. This study aimed to investigate the threshold effect of debt sustainability on investments amidst macroeconomic swings from 1981 to 2020. In this regard, the threshold autoregressive regression (TAR) was used because it gave information on the optimal threshold of debt sustainability that would attract investments. Also, the Granger causality test was carried out to show the direction of causality among the variables. This paper concentrated on debt service to revenue and total debt stock to GDP as debt sustainability measures while investment was decomposed into public, private, and foreign investments. The paper yields that, based on the multivariate TAR analyses, the main threshold variables, that is, debt service to revenue and total debt stock to GDP, had a non-linear relationship with public, private, and foreign direct investments amidst changes in macroeconomic variables such as exchange rate, inflation, and monetary policy rate. The threshold coefficient of debt service to revenue indicated that public and foreign direct investments declined during low thresholds while private investment increased. However, the opposite prevailed when debt service to revenue exceeded the threshold values. However, the Granger causality test showed that debt service to revenue Granger caused total debt stock to GDP and exchange rate Granger caused debt service to revenue ratio, implying that exchange rate swings could affect the government's ability to service debt which in turn explains the non-linear relationship between debt sustainability and investments. Hence, it was concluded that Nigeria's lack of debt sustainability was associated with revenue generation, which explains why the models did not follow a linear path.

Interest Rate, Savings, and Industrial Performance in Nigeria

This study examined the effect of interest rate and savings on industrial productivity in Nigeria. This is imperative because there has been low level of savings and investment amongst other impediment to industrial productivity. The Ordinary Least Square OLS multiple regression analysis was applied on data from Central Bank of Nigeria (CBN) Statistical Bulletin in a model where industrial sector output was the dependent variable while national savings, interest rate INTR and inflation rate INFL were the explanatory variables. The result of the analysis at 5% level of significance shows clearly that savings exerts a significant impact on industrial output in Nigeria. the result also showed that interest rate and inflation rate does not have a significant impact on industrial output in Nigeria. The study concluded that, savings has a significant positive impact on industrial output while the impact of interest rate and inflation rate on industrial output in Nigeria was positive but insignificant. It was recommended that there is a need to bridge the widening gap between lending rate and savings rate to encourage savings to generate needed loanable funds for investment in Nigeria.

The impact of macroeconomic variables on foreign direct investment in Nigeria

This study's main goal is to determine the effect that specific macroeconomic factors have on the amount of foreign direct investment (FDI) flowing into Nigeria. The ex post facto research design was adopted, and it used exchange rate, inflation rate, monetary policy rate (MPR), and gross domestic product growth (GDP) rate as the macroeconomic variables. The quantity of inflow between 1986 and 2020 was made up of FDI (dependent variable). Because the model variables were integrated in a mixed order of both level and first difference, the autoregressive distributed lag (ARDL) technique was used. The selected macroeconomic variables and FDI were bound by a long-run connection, according to the results of the ARDL bounds test for cointegration. The calculated short-run coefficients showed that GDP growth rate and monetary policy rate were the primary macroeconomic variables that considerably increased FDI inflow in Nigeria, whereas inflation and exchange rate were the major macroeconomic variables that significantly decreased FDI inflow. In the long term, the GDP growth rate and the exchange rate had a beneficial influence on FDI influx, whereas the monetary policy rate had a large negative effect. According to these empirical findings, it is advised that Nigeria's monetary authorities should support strong GDP growth, exchange rate stability, and efficient monetary policy rates in order to draw FDI into the country and create efficient foreign exchange policies that will attract foreign investors.

Financing renewable energy: policy insights from Brazil and Nigeria

BackgroundAchieving climate targets will require a rapid transition to clean energy. However, renewable energy (RE) firms face financial, policy, and economic barriers to mobilizing sufficient investment in low-carbon technologies, especially in low- and middle-income countries. Here, we analyze the challenges and successes of financing the energy transition in Nigeria and Brazil using three empirically grounded levers: financing environments, channels, and instruments.ResultsWhile Brazil has leveraged innovative policy instruments to mobilize large-scale investment in RE, policy uncertainty and weak financing mechanisms have hindered RE investments in Nigeria. Specifically, Brazil’s energy transition has been driven by catalytic finance from the Brazilian Development Bank (BNDES). In contrast, bilateral agencies and multilateral development banks (MDBs) have been the largest financiers of renewables in Nigeria. Policy instruments and public–private partnerships need to be redesigned to attract finance and scale market opportunities for RE project developers in Nigeria.ConclusionsWe conclude that robust policy frameworks, a dynamic public bank, strategic deployment of blended finance, and diversification of financing instruments would be essential to accelerate RE investment in Nigeria. Considering the crucial role of donors and MDBs in Nigeria, we propose a multi-stakeholder model to consolidate climate finance and facilitate the country’s energy transition.

An Empirical Investigation of the Effect of the Covid-19 Index on Foreign Direct Investment in Nigeria

An Empirical Investigation of the Effect of the Covid-19 Index on Foreign Direct Investment in Nigeria

Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020)

In auspicious macroeconomic setting, monetary policy should increase credit availability, particularly in the real sector, to spur investment; however, this is not the case in the Nigerian economy. In this study, the impact of monetary policy on bank credit and investment in Nigeria from 1981 to 2020 was investigated. The central bank of Nigeria’s statistics bulletin was the source of the data used in this study. Using the data gathered, the study used Auto-Regressive Distributed Lag (ARDL). The study’s findings indicate that bank loans and investment have a long-term association with monetary policy. In addition, it was observed that while bank loans to the private sector and the liquidity ratio had short-term negative effects on investment, the cash reserve ratio, monetary policy, money supply, and inflation rate had long-term positive effects on investment. According to the study’s findings, monetary policy significantly and favorably affects bank credit and investment in Nigeria. The study suggested that the CBN adjust the monetary policy rate by reducing the cash reserve ratio, which will increase liquidity and allow the banks to discharge their credit capacity with the aim of improving investment in Nigeria. Monetary authorities should view credit as a major channel for implementing monetary policies, and this urgent adjustment should be made.

Risk of Geometric Increase in Debt Servicing on Public Investments in Nigeria

The study investigated the risk of geometric increase in debt service on public investments in Nigeria using a time series data from 1985 – 2021. The study employs ARDL model in analyzing the behavior of the variables. The findings show that there is a significant direct relationship between domestic debt stock and public investment. Similarly, it also shows same non-risky relationship between external debt and public investment in the past two years as shown from lagged values of last year and the year preceding it. External debt servicing has non-risky relationship with public investment in the current year as it avoid crowding out effect of private investment. But it shows a risk relationship in the two years before. The results also visualize that there is a direct relationship between FDI and public investment in the current year and indirect relationship in the preceding years. It can also be seen that a negative relationship exists between inflation and public investment, while a negative relationship exists between exchange rate and public investment in the current year, a positive relationship exists between exchange rate and public investment for Nigerian economy which suggests that exchange rate volatility matters as it affects debt servicing in the long run.

Analysis of the influx of foreign direct investment in Nigeria and its impact on economic growth

Influx of Foreign Direct Investment and its impact on economic growth in emerging economies evidence from Nigeria between 1981 and 2020 has attracted various perspectives thoughts even though with no clear empirically prove evidences. Therefore, the objective of this study is to ascertain the effect of Foreign Direct Investment and its impact on economic growth in Nigeria. The study adopted the theoretical Research design where the use of secondary data was employed to evaluate the effects of Foreign Direct Investment on growth of the Nigeria economy. The analytical tool used in the study was descriptive. Findings from the study revealed that, Foreign Direct Investment impact on growth of economy in Nigeria was not very clear because over the years and even currently it is poorly managed and the financial framework is not well developed logically to record the full benefits. The study recommending among other things that; Government should improve the financial framework operations and encourage citizens to invest locally so as to attract FDI collaboration that will impact the local economy and quality of material and Human Resource growth in Nigeria.

Relating exchange rate, interest rate and credit to private investment in Nigeria

The study investigated the link among interest rate, credit, exchange rate and private investment with focus on the Nigerian economy. The sets of data are drawn from the statistical bulletin of the Nigerian Central Bank for the period 1981 to 2016. The ARDL bound test approach showed that the elasticity of private investment to the studied variables thus: 32% and 46% for its own first and second lag respectively; 141% and -131% for the contemporaneous and first lag value of credit respectively; 5% for interest rate with exchange rate showing a non-significant elasticity of 0.01%. The ECM shows that private investment adjusts to the speed and dynamics of interest rate, credit and investment. It is recommended that government in collaboration with the monetary authorities should evolve an interest rate, credit creation policies and exchange rate that work to stimulate investment in particular and growth in general.

Years of Government Agricultural Investment in Nigeria: Any Significant Effect on Agricultural Output? (Recent Evidence)

Despite the agricultural sector’s robust performance, Nigeria remains vulnerable to food insecurity and is unable to meet domestic demand. This study seeks the empirically analyze the impact of government agricultural investment on the growth of agricultural output in Nigeria.The study covers the period 1981–2020 using annual data from secondary sources and Augmented Dickey fuller (ADF) test was deployed to test their stationarity. The result from the short run autoregressive distributed lag (ARDL) model results show that government agriculture investment in Nigeria affects agricultural output positively. As such, the government of Nigeria should make more budgetary allocation towards agricultural sector by balancing support across small-scale farming and existing investments as well as support in women farmers.

Effect of military spending on private investment in Nigeria: does a crowding-out effect exist?

This study adopts ARDL and VAR estimation methods to examine whether military spending crowd-out or crowd-in private investment in Nigeria. We use the data that covers the period from 1970 to 2019. Our results, based on the ARDL method, show that military spending only crowds-out private investment in the short run. In the long run, military spending crowds in private investment. The results are robust to the use of alternative estimation methods. Specifically, IRF results show that military spending has a contemporaneous negative effect on private investment. However, the negative effect turns positive after the third period. Also, FEVD results show that most of the variation in private investment is explained by its shock and few by military spending. Our findings have policy implications. While it is advisable to spend more on the military to curtail the activities of insurgents, bandits and kidnappers and to restore confidence in investors, it is important also to take cognisance of the fact that military spending can crowd out private investment.

Implications of Kidnapping for Ransom on Foreign Investment in Nigeria

Implications of Kidnapping for Ransom on Foreign Investment in Nigeria