Impact of Privatization on Economic Growth in Nigeria

Abstract

Due to their pursuit of profit maximization, which prevents the impoverished from affording private schools or hospitals, the privatization of public enterprises has caused more harm than good to the general population.  However, using time series data covering the years 1990–2022, this research investigates the effect of privatization on economic development. ARDL was used by the research to analyze the data. According to the (ARDL) model, there is a long-term association between the variables. Long-term analysis of this study showed that, with the exception of inflation, market capitalization, privatization, and foreign direct investment had beneficial effects on Nigeria's economic growth that were statistically significant. With the exception of the inflation rate, this study's findings on the short-run dynamism suggested that the prior value of the RGDP, privatization, and market capitalization had a favorable effect on economic development in Nigeria but were statistically insignificant in the model. Diagnostic testing showed that the model passed all of the tests for normality, serial correlation, heteroscedasticity, Ramsey RESET test, and model stability.  This study found that, albeit statistically insignificant in the near term, privatization had a favorable effect on economic growth in Nigeria. Therefore, in order to promote inclusive economic growth in Nigeria, this study recommended that the government privatize underperforming public assets, minimize the negative effects of inflation through monetary policy, raise public awareness of investing in the capital market, and lessen the impact of insecurity on foreign direct investment.