MACROECONOMIC ENVIRONMENT AND ENTREPRENEURSHIP IN NIGERIA

Abstract

This study investigates the nexus between the macroeconomic environment and entrepreneurship in Nigeria using linear regression with ARMA (autoregressive moving average) analysis. Results indicate a positive relationship between GDP per capita and both new businesses registered and new business density, highlighting the role of economic prosperity in fostering entrepreneurial activity. Conversely, inflation exerts a negative influence on entrepreneurship, with higher inflation rates associated with reduced new business registrations and lower business density. Access to financing emerges as a crucial factor, as reflected in the positive correlation between monetary sector credit to the private sector and new business registered. However, the significance of this relationship is marginally significant, prompting further inquiry into credit provision mechanisms. Furthermore, government expenditure on education is found to negatively impact entrepreneurship, underscoring the importance of aligning education spending with entrepreneurship development initiatives. The findings underscore the need for targeted policies aimed at promoting economic growth, mitigating inflationary pressures, enhancing access to financing, and aligning education spending with entrepreneurship support programs to create a conducive environment for entrepreneurial growth in Nigeria.