Determinants of Private Sector Growth in Nigeria, 1981 - 2020

Abstract

This study examines and analyses the determinants of private sector growth in Nigeria. The dependent variable is Private Sector Growth (PSG) and the independent variables are Real Gross Domestic Product (RGDP), Interest Rate (INTR), Per Capita Income (PCI), Inflation Rate (INFR), Exchange Rate (EXR), Broad Money Supply (BMS). The data for the study were sourced from CBN Statistical Bulletin, 2019 / 2020 edition from 1981 to 2020. The study employed Cointegration and Error Correction Mechanism as the main analytical tool. It also applied the unit root test and results showed that the data were integrated at order one while the long-run relationship among the variables was confirmed using the Johansen (1988) cointegration test. Estimates of the Error Correction Model result showed that Interest Rate (INTR), Exchange Rate (EXR) have a negative significant relationship with the determinants of private sector growth in Nigeria, Broad Money Supply (BMS) has a negative significant relationship with the determinants of private sector growth in Nigeria. In conclusion from the above results, it was observed that the determinants of the private sector growth in Nigeria contributed to the improvement and enhancement of Interest Rate, Exchange Rate and Broad money Supply in Nigeria. It was recommended that interest rate, exchange rate and broad money supply have a significant positive and negative relationship between interest rate, exchange rate and broad money supply with the determinants of private sector growth in Nigeria base on this result: it is recommended that continued attraction of real sector development from private investors would boost economic growth in Nigeria. And also to develop human capital for Nigeria would be to put in place policies and infrastructures that could encourage private investment inflows.