Effect of foreign private investment on the development of small and medium enterprises in Nigeria

Amadin Victor Idehen and Osarumwense Vincent Iguisi
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Amadin Victor Idehen: Department of Entrepreneurship, Faculty of Management Sciences, University of Benin, Benin City, Nigeria
Osarumwense Vincent Iguisi: Department of Entrepreneurship, Faculty of Management Sciences, University of Benin, Benin City, Nigeria

International Journal of Research in Business and Social Science (2147-4478), 2020, vol. 9, issue 7, 257-266

Abstract: This study sought to examine the effect of foreign private investment on the development of small and medium scale enterprises (SME’s) in Nigeria. The study adopted a longitudinal research design which made the use of secondary data imperative. The study employed data on the foreign private investments and development of SMEs in Nigeria covering 1991-2018. The variables used are Net Foreign direct investment, Net Foreign Portfolio investment, percentage of foreign direct investment in Gross Domestic Product (GDP), and development of SMEs in Nigeria. The technique adopted in this study is multiple regressions to test the hypotheses. E-view econometric software 3:1 was used for the analysis. The result revealed that the value of Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) have a negative relationship with the development of SME’s and Foreign Direct Investment (FDI) in the percentage of gross domestic product and exchange rate have a negative and significant impact on the development of SME’s in Nigeria. It was recommended among others that government should increase its funding of small and medium scale enterprises, SME’s should be encouraged to go on public offer to expand the scope of funds, the exchange rate must be strengthened to encourage SME’s to attract funds and the needs to stabilized the economy to discourage divestment. Key Words:Foreign direct investment, Foreign portfolio investment, Foreign direct investment in gross domestic product and Development of SME’s.

Date: 2020
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