GOVERNMENT BUDGET AND PRIVATE INVESTMENT PROMOTION IN NIGERIA.

Abstract

The study investigated the impact of government budget on private investment promotion in Nigeria. The ex-post facto research design which investigates possible cause-effect relationship, was adopted for this study. The population for this study is the Nigerian economy on government budget and private investment promotion from 1990 to 2023, the year of Nigeria independence to date. Using purposive sampling technique, a sample of thirty-four (34) years (1990-2023) was considered for this study. Considering the objectives of this study and the nature of data to generate, the secondary source of data collection was employed in this study. The study employed descriptive statistics to summarize data trends and unit root tests to confirm stationarity of variables. Diagnostic and stability tests were used to ensure model reliability and validity. The ARDL model was applied to assess both short-run and long-run effects of government expenditure on investment. Moderated multiple regression was used to evaluate the interaction effect of exchange rate and inflation rate on the relationship between government spending and investment. The results of the current study indicate that government budgetary allocations to key social sectors—health, education, and agriculture—do not exert a statistically significant influence on domestic private investment (DPI) in Nigeria over the analyzed period. The study recommended that the Nigerian government prioritize improving the efficiency and transparency of budget implementation, particularly in health, education, and agriculture sectors, to ensure that allocated funds translate into tangible infrastructural and institutional improvements that can attract private investment. Furthermore, the government should design and implement targeted policies that align public spending with private sector needs, focusing on capital expenditures that enhance the business environment, such as infrastructure development, technology adoption, and capacity building.