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ABSTRACT
Government domestic borrowing and private sector Investment are two complex economic scenarios that require absolute harmonization for an economy to thrive. There is no economy that survives without the private sector operation which also relies on accessibility to funds. This study examines the impact of government domestic debt on private sector investment in Nigeria. Data for the study have been collected from the Central Bank of Nigeria Statistical Bulletin 2019 edition, World Development Indicator, African Development Group, Debt Management Office.. The variables on which data are sourced include private sector credit, domestic debt, interest rate , inflation rate and Government Expenditure. The scope of the study spans from 1981 to 2019 and the data are analyzed using the ordinary least squares multiple regression technique. The study finds that domestic debt has a significant negative impact on domestic private sector Investment while a negative relationship exists between domestic private sector credit and domestic private sector investments in Nigeria also a negative and significant relationship between government expenditure and domestic private sector investments however a positive and significant relationship exists between inflation and domestic private sector investments growth in Nigeria. These findings lead to the recommendation that government domestic borrowing activities should always be done with the interest of the private sector businesses in mind. The study further suggests moderation of interest rates by the relevant authorities in order to boost private sector access to finance and encourage entrepreneurship in the country.
