The Role of Private Investment and the Relationship between Monetary Policy and Economic Growth in Nigeria

Joseph Olusegun Ajibola, Titilope Idowu Oladejo, Kolawoledaud Adedapo and Kolawole Adeyemi Agunbiade
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Joseph Olusegun Ajibola: Department of Economics, Babcock Business University, Ogun State, Nigeria
Titilope Idowu Oladejo: Department of Economics, Babcock Business University, Ogun State, Nigeria
Kolawoledaud Adedapo: Department of Economics, Babcock Business University, Ogun State, Nigeria
Kolawole Adeyemi Agunbiade: Department of Accounting, Babcock Business University, Ogun State, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 5, 655-672

Abstract: Despite government initiatives and policy reforms promoting private investment, such as the Structural Adjustment Programmes and various economic reform policies, Nigeria has experienced minimal improvement in private investment indicators, with the share of private investment in economic growth fluctuating over the years, characterized by intermittent increases and declines. Thus, the study investigates the role of private investment and the relationship between monetary policy and economic growth in Nigeria. The study utilized secondary data obtained from the Central Bank of Nigeria through an ex-post facto research design spanning from 1985 to 2022. Employing an autoregressive distributed lag model, which includes an error correction mechanism and cointegration test, the analysis examined variables, revealing that private investment mediates positively in the relationship between monetary policy and economic growth in Nigeria. The findings underscored the significant impact of private investment on the nexus between monetary policy and economic growth, suggesting policy recommendations including incentivizing private investment through the removal of capital controls and investment regulations, reducing or eliminating taxes and regulatory burdens, and fostering a supportive environment for business creation.

Date: 2024
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