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Domestic investment has an important place in the economies of countries, because it is very paramount in achieving economic development and its impact on several economic variables. The size of its investment stock uses different means and methods to help stabilize and stimulate investment. Investment (public and private) contributes to the economic prosperity of a nation.

The rate of investment in a country is a critical factor in its economic growth and development (Yolopoulost and Nugent, ). Nigeria is still saddled with a number of economic Maladies despite the structural reform carried out by Nigeria government.

These problems includes high rate of inflation, low level of savings and investment, wide spread poverty and highly level of unemployment. This situation as increase so many researchers who have described the reforms woes rather than a blessing. Instead for the economy to adjust into recovery, the situation continues to deteriorate.

The expected role of private and public sector investment as an engine of growth never materialized. The most important aspect of expansion in investment needed to sustain economic growth is yet to be achieved. The macroeconomic indicators in Nigeria reflect these poor performances between 2000 through 2018.

The most important part of an open and effective economic system is investment and also serves as a major factor that facilitates economic growth of most economy. Domestic investment has attracted enormous debate in economics literature, particularly in the advanced economies due to its nature and stability.

The preponderance of studies on this subject include Uremadu (2006), Adegbite and Owualla (2007) argues that although direct investment (FDI) is beneficial to host countries by speeding up the process of growth and development of the economy, its multiplier effect is greater.

This is because, borrowing from outside is not a proper strategy for growth and development since it does not only have adverse effect on the balance of payment as these loans will be serviced in the future with the use of their domestic resources, but it equally carries a exchange risk such as of their currency which is one of the specific conditions for borrowing from International Monetary Fund (IMF).

Hence, domestic investment through capital formation is not just paramount, but serves as a prerequisite for the geometric acceleration of growth and development of every economy as it provides domestic resources that can be used to fund the investment effort of the economy.

Over the years, emphasis has been placed on direct investment (FDI) for economic sustainability, particularly in developing countries of Africa, Asia and Latin America. But the broad issue is that, most increase in the economic growth of the host countries by FDI always affect the size of host country’s domestic investment, this concern emanates from the fact that direct investment reduces the output, employment and as well worsen the balance of payment of those countries concerned (Agosin and Mayer, 2000).

The external reserve result suggest that a unit increase in external reserve will bring about on the average 2% increase in domestic private investment in Nigeria which is actually consistent with the similar result obtained by Chibber and Manssoor (2008) the case of Mexico.

Conclusively, the GDP result suggest that a unit increase in gross domestic product will produce on the average about 22.6% increase in domestic private investment which is inconsistent with the one of obtained in the case of cote d’Ivoire (kouassy and Bohoun, ).

It is to this end that, Akanbi (2010) observed that a reduction in the widespread poverty which is a major feature of the Nigeria economy can be achieved through a sustained increase in domestic investment, because domestic investment provides more employment opportunity for indigenes than the FDI.

Evidence from Chile economy shows that domestic investment has contributed up to 21% of their GDP (The Chilean pension system), while in Nigeria, domestic investment contributes about 53.1% of Nigeria’s Gross Domestic duct (GDP) by employing about 10 percent of the labour force mostly from industrial sector of the economy (Federal Research Division, 2008).

This means that the outcomes of domestic investment may likely influence the levels of economic growth in Nigeria. The persistence growth in output of domestic firms can in fact emerge and produce for export s, thereby contributing to the total capital formation of the country of origin, and as well serve as investors to other countries.

It has therefore been realized that economic growth in Nigeria only requires diversification and expansion of domestic investment. Emphasis on domestic investment may likely increase diversification of the economy, by accelerating economic growth through high export-led activities, low inflationary rate etc., than FDI driven economic investment.

Research works on the relationship between domestic investment and economic growth in Nigeria are relatively scanty despite the useful contribution of domestic investment in Nigerian Economy. The percentage of domestic investment in Nigeria has reduced drastically,

resulting from macroeconomic variables disequilibria—such as, inflation rate; exchange rate fluctuations; balance of payment problems; high external debt ratio; increase in population, corruption, etc recently and was worsened when most recently there was a significant drop of crude oil prices in OPEC.

The recent economic recession was largely blamed on the poor domestic investment nature of Nigeria economy where oil export constitutes 9% to Nigeria export earnings.  With any fluctuation in crude oil price in the international the economy will slump backward.

Domestic investment should be highly encouraged and promoted to ensure diversification of the economy away from crude oil if Nigeria economy must overcome the impending danger of serious output decline and further prevent successive economic recession like the one just witness in the country between second quarters of 2016 till third quarter 2017.

Although most works were based on the impact of domestic investment on economic growth, (Ayanwale, 2007; Ayorinde, 2002), it is upon this premise that this study is designed to fill this gap in the body of literature, by investigating the trend of domestic investment in Nigeria from 2000 to 2018.


A number of studies have illustrated that there exist a correlation between private investment and public investment. Everhart and Sumlinski (), Odedokun (2007), are amongst scholars who have investigated this statement with different results. In less developed countries, government plays a vital function in capital formation. Specifically, public investment makes up a significant part of total investment.

Hence, the effect of public investment on private investment is indefinite. That is to say, public investment can work as a substitute (negative impact on private investment) to or a complement (positive impact on private investment) for private investment.

The level of the impact depends on the sector in which the government carries out the investment projects. Public investment may promote private investment when it assists in increasing the productivity of private-owned firms.

Conversely, it may crowd out private investment when the government invests in ineffective state owned companies; private investors anticipate higher taxes to pay for such expenditures; the public sector competes with the private sector for internal loanable funds (Apergis, 2000).

The problem becomes that Nigeria domestic investment as well as capital accumulation has not been growing and has declined by 24% between the years 2000-2013 (World Bank, 2014). This is a real problem, although direct investment has been growing steadily except with the recent economic recession in the country that sawa substantial reduction in FDI by about 28% within 2014-2018 (CBN, 2018).

Nigeria macroeconomic indicators show the pitiable performance of a Domestic investment in Nigeria for the period 2000 till date (CBN, 2018).


The major purpose of this study is to analyse the trend of domestic investment in Nigeria (2000-2018). Other general objectives of the study are:

    1. To examine the macro-economic policy variables which could influence domestic private investment


    1. To analyze the trends in domestic investment in the context of Nigeria economy


    1. To examine the impact of private and public investment on economic growth in Nigeria.


    1. To examine the determinants of domestic investment in Nigeria for the period 2000 to 2018.


    1. To examine the relationship between domestic investment and macro-economic policy


    1. To recommend solutions that will help boost investment opportunities in Nigeria



    1. What are the macro-economic policy variables which could influence domestic private investment?


    1. What are the trends in domestic investment in the context of Nigeria economy?


    1. What is the impact of private and public investment on economic growth in Nigeria?


    1. What are the determinants of domestic investment in Nigeria for the period 2000 to 2018?


    1. What is the relationship between domestic investment and macro-economic policy?


    1. What are the recommended solutions that will help boost investment opportunities in Nigeria?



H0: There is no significant relationship between domestic investment improvement and other economic indicators in Nigeria.

H1: There is a significant relationship between domestic investment improvement and other economic indicators in Nigeria


The study will explore the impact or effectiveness of domestic corporate investment on Nigerian economic growth. Though the scope of study will be limited to the corporate investment, it is hoped that the exploration of this will provide a broad view of the operations of corporate investment in the nation.

It will contribute to existing literature on the subject matter by investigating empirically the role, which the domestic investment plays in the economic growth and development of the country. The main importance of this study is expected to expose the extent of growth and development of

Nigeria economy resulting from openness of the economy, domestic and investment which the country has aspired over the years. The study will also help in the design of relevant policy that will promote development and growth.


The study is based on analyzing the trend of domestic investment in Nigeria (2000-2018).


Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the .

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Investment: Investment on finance is the acquisition of financial assets for earning returns.

Domestic investment: This is an investment in the companies and products of someone’s own country rather than in those of  countries. Domestic investment is the measure of physical investment used in computing GDP in the measurement of nations’ economic activity. This is an important component of GDP because it provides an indicator of the future productive capacity of the economy.

Economic Growth: Is the increase in the goods and services produced by an economy, typically a nation, over a long period of time. It is measured as percentage increase in real gross domestic product (GDP) which is gross domestic product (GDP) adjusted for inflation. GDP is the value of all final goods and services produced in an economy or nation.

Gross Private Domestic Investment: This is the measure of physical investment used in computing Gross Domestic product (GDP) in the measurement of a nation’s economic ability.


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