Effect of Macroeconomic Determinants on Private Sector Investments in Nigeria, 1986-2020

The main objective of the study is to appraise the effect of macroeconomic determinants on Private Sector Investments in Nigeria from. Specifically, the study sought to investigate the effect of Interest Rate on Private Sector Investments in Nigeria, ascertain the impact of Money supply (MS) on Private sector investments in Nigeria, determine the effect of Exchange Rate on Private sector Investments in Nigeria, and ascertain the relationship between inflation rate and Private Sector Investments in Nigeria. The data was obtained from Central Bank of Nigeria (CBN) Statistical Bulletin and Debt Management Office (DMO) in Nigeria covering the period of 1986 through 2020. The work employed ex-post facto design method. In line with empirical principles, Ordinary Least Square (OLS) econometric technique was adopted to examine the major effects of macroeconomic determinants on Private Sector Investments in Nigeria. The dependent variable is Private Sector Investment while proxies for macroeconomic determinants variables are Interest Rate, Money Supply, Exchange Rate and Inflation rate. The results show among others that Interest Rate has a positive and non-significant effect on private sector investment in Nigeria over the period 1986-2020. The study recommends among others Since Interest Rate has significant influence on private investment in Nigeria, commercial banks should be advised by the regulatory body to inculcate the habit of boosting private savings and the deposit rate so as to increase the level of lending to the private sector. For sufficient economic growth and sustainability of Nigeria's economy, monetary authorities and government should lower the lending rate, so that local investors especially small and scale entrepreneurs can have easy access to loan facilities from banks.