Private Sector Investments and Unemployment in Nigeria (1986-2016)

Abstract

This research work examined private sector investments and unemployment in Nigeria. The period covered by the study is from 1986 -2016.  The study aimed at identifying the impact of private sector investments on unemployment level in Nigeria. Times series data on Private Domestic Investment (PDI), Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI) and Unemployment rate were collected from secondary sources via the Central Bank of Nigeria Statistical Bulletin and  World Bank Development Indicators. The Johansen co-integration, analysis, Vector Error Correction (VECM) and Pairwise Granger causality analysis were employed in the data analysis.  The Johansen cointegration result indicated the existence of long-run relationship between private sector investment variables and unemployment rate in Nigeria.  In the same vein, the Vector Error Correction Model (ECM) estimate equation is properly signed with a negative coefficient of -0.006644 but with an insignificant t-statistic probability value of 0.7376 at 5% significance level. The insignificant t-statistic implies that private sector investments do not granger cause unemployment rate in the long-run. However, a significant but negative relationship was found between past unemployment rate and private domestic investment lagged one period and unemployment rate in Nigeria. The study therefore recommended that sustainable policies that will ensure and encourage growth of private sector investments should be vigorously pursued by stakeholders in the industry. These policies could come in form of access to cheap funds (through reduced interest rates or cost of funds), subsidization of inputs in the production process, tax waivers or newly established firms among other policy initiatives.

Keywords: Private Sector, Investments, unemployment rate.

DOI: 10.7176/RJFA/10-14-07

Publication date:July 31^st 2019