Impact of Kidnapping and Political Instability on Investment in the Nigerian Economy

Abstract

This study investigated the impact of kidnapping and political instability on investment in Nigerian economy. To achieve this objective, relevant data used spanning from 2006-2022 were sourced from the World Bank Indicators, and Worldwide Governance Indicators for the period under review. Preliminary test were conducted and Ordinary Least Square (OLS) regression was the analytical tool for this study. Political stability and the Absence of Violence/Terrorism Estimate (PSAVTE) were utilized as the independent variables, and Foreign Direct Investment (FDI) as a percentage of GDP was employed as the dependent variable. Based on the analysis, there exist a negative relationship between FDI, and PSAVTE, the F-statistic of the regression output stood at 1.082523 this implies that the regression plane is not statistically significant. Also, the Prob. (F-Statistic) 0.314615 is greater than the 0.05 level of significance implies that there is no statistical significant relationship between the variables. R2 = 0.067311 implies that about 6.73% of the total variation in the model specified was accounted for by the independent variables. FDI and PSAVTE are platykurtic. All the variables were stationary and significant at their respective values. No causality among the variables, thus, no existence of long-run relationship between the variables. In conclusion, kidnapping and political instability has adverse effect on investment, the fear of attack on business during conflict affects business decisions and the degree of investment. The study recommends that government must reduce the degree of unemployment in Nigeria, since a high level of unemployment promotes social vices, crime, and political instability.