Determining Private Investments in Nigeria: The Effect of Domestic Debt

Abstract

This study examined the effect of public debt on investments (private and public) in Nigeria for the long-run period of 1981 to 2022. The study examined a number of significant public debt variables that are difficult to neglect when trying to understudy the effects of public debt. The variable is government domestic debt (DMD). The control variables, which are GDP growth rate, total government revenues, total government expenditures, inflation and private sector credits in Nigeria are coded GDPG, GVR, GVX, INF and CPS. The result of the study showed that government domestic debt boosted private investment. In all, private investments have benefitted more from domestic public debt. This means that domestic public debt crowd in more of private investments, all things being equal. In line with the findings/conclusion made in this study, the following recommendations are put forward: The most concern drawn from the positive significance of government domestic debt is that its increases impede private sector credits. As this is, it means that the complementary role of the monetary policy has not been seen. The CBN, in the face of increasing domestic public debt, should enhance policy directions to also increase private sector credits.

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